Good morning, everybody. Welcome to our Eden Prairie campus. Thanks for making the investment to come join us here. I know that's a big investment of your time. We're really excited to have you here. I'm Tim Gagnon, Director of Investor Relations and Business Analytics. I'll be facilitating the agenda today with the leadership. We've got a lot of content to race through. I'll just open up here with the first few minutes of what to expect for the day. Then I'll hand it right off to John to kick off the morning. Before I do that, I'm just going to take care of the obligatory safe harbor statement. I'll read that quickly. As a reminder, comments made by Robinson leaders 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. All right. On your tables in front of you there, we've provided an agenda for today. For those listening on the webcast, you'll also be able to see the agenda as well. I'm not going to go through the agenda in detail. You'll notice a few things. There's a few breaks in the day. We've broken up the day into a few sections, a couple of morning sessions and a couple of afternoon sessions. There'll be opportunities to take a few breaks during the day. Again, I'll turn it over to John here in just a moment to kick things off.
I also wanted to just take a moment to mention that beyond the presentations that we'll be providing that you see on the schedule, we will also be offering a Q&A of many Q&A forums. I'll just outline that for you now. At the end of each of the presentations, we will allow three to five minutes for Q&A. Call it one to three questions. I'll be facilitating that, trying to keep us strictly on the timelines for the benefit of getting through all the content as planned. At the end of every session or presentation, there'll be a brief Q&A. Also, over the lunchtime, which is scheduled from 12:00-12:45 P.M., all the leaders will be throughout the dining area, which will be right next door. You'll have access to conversation with the leadership during that time.
At the tail end of the day, you'll see on the agenda, 30 minutes allocated to an open cast Q&A where we'll bring all the leaders up to the front. We'll just have an open cast Q&A that I will facilitate at that time. Prepared content, we'll have a lot of that for you and also provide you the opportunity to ask some questions as well. We hope that works and has the right balance of give and take between being able to answer your questions and for us to also deliver some strategic messages from around the business. That's all I had to kick things off. I'm really going to turn it right over to John here to open conversation this morning with a review of our intent for the day and some strategic thoughts as well. To you, John.
Thanks, Tim. Good morning, everybody. I am going to echo Tim's comment and say thanks for making the journey to Eden Prairie. We thought we would be kind and have this in the spring in May. We got lucky. It did snow a little bit on Monday, but it is breaking back today. For those of you coming from the East Coast, thanks for making the journey and making the investment of time. This is year 20 for C.H. Robinson as a public company. I know some of you in the room go back the full 20 years with us, and many of you are much newer to the story. If you have followed us, you know that things have changed over the last 20 years, and we have only done a handful of these Investor Days with some significant acquisitions or direction.
The headline theme for why it is a good time for us to be doing this today really just relates to the overall degree of change in the industry. I think everyone in here would probably agree that our industry is changing faster than ever. The competitive landscape is changing, and C.H. Robinson is changing. The content that Tim referenced and what we are going to lay out for you today is just to give you our perspective on how we see things in our pool for strategic planning. We are increasing just like everybody else is. I would say the opportunities and the threats are as high as they have ever been in the time that I have been at Robinson.
It is easy to get consumed by the threats and the changes in the competitive landscape, but we are also really excited about the opportunities, and we want to lay that out for you and talk about where we see opportunities, where we see the potential to grow, and how we are going to go after the market. That is why we want to do this today. That is the primary headline that we are hoping to take away. For those of you who do not know me, I have been with Robinson for 25 years. I was the CFO the first couple of years of that public life cycle, promoted to president in 1999, and I have been the CEO for the last of these 20 years at Robinson. Okay.
When we think about the opportunity and the threats that are out there and the changing landscape, I want to start by grounding you on some of our enterprise thinking and how we go to market as an overall organization. One of the messages that I hope you feel and hear today about the opportunity side of what we are going to cover is that while the industry is changing and there are challenges that we have to deal with, one of the things that I feel the most optimistic and confident about is if you rewind over these last 20 years and look at our industry, probably the most positive trade-off to the changes in the competitive landscape has been the concept of an addressable market. When we went public 20 years ago, there was a lot of conversation.
I think we were one of the first companies in this industry, especially. At that time, there was a lot of discussion about a small niche and where C.H. Robinson would fit in and what our limits would be in the industry. Over the last 20 years, there's been an evolution of the competitive landscape, the formation of Transplace when all the large carriers got together three or four years after we went public, a lot of traditional competitors who have come into the space. You've seen most of the analysts kind of project that 3PL market share has gone from 6%, 7%, maybe up into the mid-teens now. A lot of the changes that are happening in the industry today are really premised on 100% addressable market within the 3PL sector.
A lot of the digital transformation and changes that are going on are really going after the entire transportation supply chain. A lot of the initiatives that you're going to hear today are really focused on global supply chain services and things that we're doing. From a very high level, the kind of core tug of war that we feel in today's environment is the opportunities and threats compared to the SWOT analysis, both being incredibly active. Really, the overall way that Robinson is reacting to that is we're playing offense, continuing to go after market share as aggressively as we ever have. We think the opportunities outweigh the threats for us, and we believe that we can continue to create value. We still think our financial goals that we laid out three and a half years ago at our last session are achievable.
Andrew's going to recover those and share them again with you. I do want to really focus today on how we're going to market the changes that we're going through, how we're investing in technology and digital transformation, and how we feel that we can continue to win and go after those opportunities in the marketplace. The headline of how we do that starts with our mission and vision statement. The mission statement we've had for a while. It focuses in on people, process, and technology and serving our customers through that 3PL model. We've been doing it for 100 years. We've been emphasizing it for the last 20 years as a public company, and we feel it's something that we're very good at and consistent. Our vision statement is newer. It's a little bit more aspirational around being the world's most powerful supply chain platform.
We do believe we're a platform company. 20 years ago, people may have laughed if that was our vision statement, today you'll see and hear examples of where there are a lot of very significant corporations that are relying on our platform for global visibility over a lot of their freight execution. You can access our platform for transactional services. There's a lot of it that's fully automated. I want to walk you through today and get you inside our heads around how we're investing in our platform or leveraging our platform. We think of the platform as people, process, and technology. It's all three of them. That's what our vision is to continue to build a more and more powerful offering in the marketplace, and we think we can pursue the opportunities that are there.
People, process, and technology are the words that I emphasize in our mission statement. They define the pillars in the vision statement. I want to spend most of my time kind of kicking off how we think about these things. When you think about Robinson and the things you're going to hear over the remainder of the day, these are three of the areas where we think there is the most enterprise leverage in Robinson. After the divisional leaders present, you're going to hear from the functional leaders, Angie in HR, Mitch with our customers, innovation, and process, and Chad on the technology side. These are three areas that unite all of the services and divisions of Robinson in a way that we think we can create. We are and can continue to create enterprise leverage and efficiency and competitive advantage in how we work things together.
If you think about digital transformation, technology disruption, things that are driving a lot of the change in the competitive landscape, I think a lot of it really ties to these three concepts and how they work together to change the marketplace. When we think about transforming Robinson and a lot of the messages that you're going to hear today about how we're preparing for the future, it entails each of these three kind of working together to go into the future. From a people standpoint, one of the messages that Angie will share is we have a very young, motivated workforce. We're very proud of our culture. We think it's a competitive advantage. We feel very good about our teams and our competitive advantage.
While certain jobs are being automated and eliminated, other jobs are more important than ever, we feel really good about the competitive advantage that we have in our team. Process has a lot to do with innovation and how we interact with our customers and create customized value. The technology stuff is pretty straightforward around how important that is to the platform. Just building that thread, it's about 4 years old. We use it often. I'll be in front of a group like this again tomorrow. It's the first time I've seen everybody, most people wearing suits in this room. Other than that, this has been a great tool for us to think about how we move forward and work together.
I'll tell you what, Chair, I know that a lot of you have questions around this competitive landscape, new competitors, digital transformation, how all of these things work together. A couple observations that I want to share along is when I look back on the last 20 years and I think about how we've been changing and how we've been succeeding and gaining market share, going from a couple billion in revenue to $13 billion last year and how we think about it going forward. When I think about digital transformation and the challenges and the opportunities that we have going forward and how these things are working together, I would share that historically, I think on the technology side, if anything, when we've been wrong, we've probably been too quick to market.
If I look back on the ROI of a lot of our technologies, I've got many examples of where we invested aggressively and the industry or the marketplace wasn't ready for it. You're going to see today a visibility tool around tracing and tracking technology and real-time visibility in the supply chain, one of the tools that we're really proud of. 15 years ago, we had an investment in a mobile company that was working with location services and real-time tracking and tracing. We ended up writing off that investment because the data costs were too high and the ROI on a lot of this technology is coming down very aggressively, and that's what excites us about some of the opportunity.
A lot of these things that we've been working on for a long period of time, the ROI on them and the adoption rates are really changing and moving much, much quicker. We've probably created more API maps in the past that got thrown away because our customers were not ready to implement them. If you think about API technology and where it's going, the implementation rates are so much faster today. When Jordan talks about Managed Services and where we're going, the acceleration of some of the adoption rates and capabilities, it's really sort of a fun thing.
When I think about how people, process, and technology work together, the technology is very important, but I know because there's so much technology coming into the marketplace right now, it's easy to think that that might be Robinson's Achilles heel or barrier, and I really don't think that's the case. I think the algorithms and the mobile apps and the different technology tools that are out there, we feel very good about where we're at in the life cycle and understanding of those, and how, as things accelerate, that we can take advantage of them as well as anybody. On the people side, we've got an adaptable workforce. We've got a young, engaged workforce. We feel pretty good about how we can change there. The process side of it, frankly, is probably one of the most challenging things.
If you think about disruption in other industries, the willingness to buy market share, the willingness to change pricing terms, the breaking of rules, if you will, in order to sort of change industries and do things. To me, that's probably the most threatening part of kind of the changes in the competitive landscape and the way things are at. What we want to do is give you the thesis today around all of these, around how we focus on people, process, and technology and what we think is important. We think they are competitive advantages for us. We think we're well-positioned to continue to evolve all of them. I believe that the synchronization of these three and how we work together as a team to deliver them to our customers is probably the most important element that's underlying all of this. This is not new to us.
People, process, and technology was in our prospectus 20 years ago. This is what we've been living for 112 years. It's what we think we're good at. It's changing faster than ever, and hopefully, we'll share some perspectives with you today about how we're thinking about these and how we plan to be successful in the future. It leads right back to our mission and vision of what we want to be as a company. Two more slides from me. Last, next thought is just around when you listen to our five divisional leaders today. Obviously, one of the important things we did a quarter ago was implement segment reporting. In today's format, you're going to see our five divisional leaders come up and talk about how we go to market and how our business is segmented into the various areas that we compete with.
Another primary reason for wanting to have this day is to make sure that you're aligned with our thinking in terms of our structure and how we're going to market and compete under these three transformational areas. It's really important. We spent a lot of time on it, and I think it's something that will serve us well going forward. There's commonality, just like people, process, and technology are common leverage points from an enterprise standpoint. There's commonality across all our services and divisions. You'll see in the presentations that we have relatively small market share in everything that we do. Part of the reason why we're playing to win and playing offense is because we do believe this addressable market is expanding, and we think there's a lot of opportunity out there for us.
You're going to see a repetitive pattern of why we're proud of our $13 billion of revenue and our presence in the marketplace in a very, very large market, and we feel very good about those opportunities that we have to go after to continue to get market share. These three bullet points have been with us since the beginning, too, and really reflect the commonality across those divisions around where we think we can add value. Growing market share, innovating and creating new solutions, expanding and optimizing our global network. Optimization of the global network has a lot to do with productivity, internal processes around how we're making things more efficient and how we're doing things in a more effective way. These are common themes that all of our divisional leaders will be addressing in different ways. This is my last slide.
It kind of ties together our team. We think C.H. Robinson's leadership team today is as strong as it's ever been. I'm very proud of it. I think it's a competitive advantage. Structure and leadership matter. You'll be able to hear today, understanding our go-to-market strategy and how we're holding ourselves accountable for delivering success and knowing the leaders that we have in place to go after those. Five divisional presidents are now on the left side. Peter's going to talk next. He'll share the financial model, the financial returns. He'll talk about our financial goals and segment reporting returns. The divisional leaders will all cover their area of the business. Then we've got the functional leaders, Chief Commercial Officer, Chief Information Officer, and Human Resource on the people, process, and technology side. That's the way the day is going to shape up.
Ben, our general counsel, is here. He'll not be presenting. I think that's a competitive advantage as well, too. We feel like our risk management and processes are as good as anybody's, and it's a big part of shareholder creation. Ben is here as well, too, if you have any questions for him around how we manage that side of it. I'm going to pause there. Drink from the fire hose to kick things off. Again, we feel very good about our competitive position, and we want to share that with you today and talk about how we see things unfolding in the future. five minutes to hear questions, comments, maybe Tim and I, things, expectations for the day, things that you want to hear that you didn't hear.
Ed, I should have done this in the opening, and I forgot to, so I apologize for that. We've got a couple of folks with microphones, and for the benefit of the folks on the webcast, if we can get you the microphone to ask the question, and we can hear you guys as well. I have Brent in the back as well. Maybe you can get the mic there, Brent. I'll facilitate it, and we've got about five minutes for questions here. Again, remember that we've got other breakout as well. Go ahead and get those questions out as well.
Yeah. I think the headline answer to that is innovation. We've got to have innovative ideas. You see around this building, you'll see some innovation labs. We try to focus on two main ways, customer-led innovation, where we're doing business reviews with our customers and trying to solve problems collaboratively. Chris will talk about our collaborative solution model and how we work with them to make sure that we're staying on the front of solutions and innovation. There's the internal research or sort of R&D element of it, if you will, to make sure that we're doing our own data analysis and analytics to come up with better ideas to way to move things forward.
I think just like a lot of manufacturers or other industries, the way the world is changing puts pressure on us to be an innovative leader and to make sure that we're adding value to our customers through those innovative solutions.
Yeah. I want to compare somewhat on the network of offices, some of your business is done not as a point of innovation. Do you think that's still an advantage in terms of visibility to market, or as visibility becomes greater from technology, does the efficiency and the scale benefit disappear?
Great question. Actually, that cuts to one of the core reasons why we voluntarily started doing segment reporting and think the way that we're going to present the information today is helpful. We do believe that our global network is valuable. We have around 280 offices around the world that do our different services. In something like Global Forwarding, having a local presence, local language, local connectivity is extremely important. [Victor] will talk about how we've been expanding our network. The most recent investment you can see in Australia already having a very positive impact by having greater ties to the local region in that global network. Within North America, where we've been this market leader for decades, we peaked around 150 locations and today have a little bit fewer than that and do not really have intentions to continue to open operational centers.
One of the things that digital processes has changed is there are more and more of the steps in our transactions that can benefit from scale and scaled centers. Flatbed East or Field we'll talk about in North America, some of our initiatives where we're actually moving our network to more dense locations. Many of you have visited Chicago Central or Kansas City or some of our larger locations to see some of the benefits that come from scaled productivity. It also helps to have subject matter experts in the room when you have those more dense centers with bigger customers that you can stratify your talent a little bit differently. Within each part of our business, Managed Services is a whole another story around control towers and how that network works out.
One of the things that we believe is that enterprise metrics on Robinson from an operational standpoint are probably less helpful than they were 10 or 20 years ago. You really do have to break down the talent information that we're sharing with you. In the first quarter that we just released, while it wasn't our finest effort in terms of bottom-line results, you do see a lot of the long-term trends that you're going to continue to see in terms of talent being added in Managed Services and being leveraged to be more productive in other parts of the network. We are trying to have better metrics around how to think about our diversified services in doing that. The structure of the network is a competitive advantage. We still believe in local presence within each of our segments and services that we're offering.
We do think there are very important variations in terms of how we go to market and leverage those advantages.
Yeah. Clearly from your introduction, and as we go through here through the day, there's obviously a big role the technology plays. At the same time, more looking at the management has been slow receptive to where the carriers need to be to this new technology that's going to be so great. What are you seeing from them about this? Clearly make sure that the whole industry is not going to another technology arms race, like you said, that no one really wants.
It's a great question, and I would say again in my opening comments that historically, when we've gotten excited about a lot of these tools and have invested heavily in them and brought them to market, we've run into a lot of change resistance and a lot of challenge around getting them implemented. I think the scale and momentum that's coming today and hitting so many other industries, that the environment's probably much riper for faster and broader adaptation and adoption of all this stuff. That's the attitude that we have as we think it's going to be different going forward and that people are going to adopt much more aggressively. I guess the core thing that I've laid out, I think our customers in general are excited about it. They all want to try to create competitive advantage through their supply chains and leverage their opportunities.
It's not hard to get an audience and to engage on these topics around how we drive efficiency and how we drive costs out of the marketplace. The process part of it really is the challenge. How do we make sure that we make it usable for them, that we make it so that it can be implemented and that we create value along the way, too, because there is a lot of cost associated with the adoption of some of these tools. Hopefully, today will give you a good flavor of what we're thinking about some of the more important elements of that and how we're going to market. We do have a busy day, and Tim's going to keep us on task. My job clock has run out, so I'm going to pass it over to Andy at this point.
Again, there will be several more Q&A sessions in the day that we will get through some of this material. Thank you.
Yeah.
Yeah.
If you are looking for Tim's chair, we have got a couple up front and a few in the back. We can make the transition.
Tim, thank you, John. Thank you all for joining us this morning. We do appreciate you taking the time and making the effort to come join us. There was a report that two investment bankers were drug off a United flight, some good news. No, I am just kidding. Thank you again. My name is Andy Clarke. For those of you that do not know me, I have been in the industry for nearly 20 years and have had the good fortune to be a part of the Robinson team for the last two. It is an incredibly talented, as John mentioned, senior leadership team. We have 14,000 people across the globe, it is a really good story, and we are glad that you are here. We know that it is an exciting time in transportation.
We know that it is a complex world, we know, as everybody wants to talk about, that there are a lot of people that are coming into this marketplace and trying to take their share. What is really good is that what you have with C. H. Robinson are the best people. What you have with C. H. Robinson are the best processes. Finally, you have the best technology. We are going to spend the rest of the day kind of walking through those. All of us work hard every day to deliver best-in-class services for our customers. We work hard every day to deliver best-in-class results for you, our shareholders. John mentioned it. Been around for 110 years, and this year we will celebrate our 20th year as a public company.
We believe we have a unique story to tell. As the other leaders come up today, we think you'll agree. I mentioned that the fact that we've been public for the last 20 years, this is important because there's a lot of companies that have been public and are no longer public. We've been public for 20 years, and I'd like to start the discussion on the financials to really focus in on the results that we've produced over the last 10 years. They're impressive. They tell a great equity story, and we believe they set the stage for us for continued success in the future. Starting with the chart on the top left, from 2006 to 2016, we more than doubled our net revenues from $1.1 billion to $2.3 billion. A compound annual increase of just under 8%.
We've done this when global GDP was good, as it was in 2006 and 2007. We've done it when global GDP was, as we all remember, in 2008 and 2009. Quite frankly, we've done it through periods of so-so GDP, as it has been for the last eight years. Importantly, as John mentioned, and you're going to hear throughout the rest of the day, we've done this as competitors have and will continue to enter our marketplace. Over that same time period, we've grown net revenue margins as well. At the end of 2016, we ended 110 basis points above the 10-year average. We've been able to achieve net revenue margin expansion by growing scale in our core truckload business, as well as expanding domestically in the LTL space, in the intermodal space.
We've further grown our net revenue margins by expanding globally through our Global Forwarding business. Mike's going to spend some time today talking about that. Acquisitions have played an important part in contributing to just under 2% of our net revenue growth during this same period. More on that in a moment. If we look at operating income on the top right, we've accomplished similar results, growing to nearly $840 million in 2016. Margins matter in our world. We are proud of the fact that we have set the bar high in the industry. As a percent of net revenue, operating income margins have averaged just under 40% for the last decade. There have been, and will continue to be fluctuations in that metric. We believe our variable cost structure, as well as our pay for performance culture and compensation, will allow us to remain at the top.
One of the larger areas of increases in SG&A, and therefore a drag on operating margins, has been the acquisition amortization that we've taken on as we've acquired companies to support our growth. You'll see in a moment that the incredibly positive impact these acquisitions have had on a metric that we know is important to you, which is free cash flow. Over the last decade, net earnings per share have more than doubled, going from $1.53 per share in 2006 to $3.59 per share in 2016. We've been successful in driving operating income and net revenue at essentially the same rate. However, in order to return more, a higher amount to our shareholders, we've been able to successfully lower our effective tax rate and repurchase shares. In a few moments, I'm going to highlight an interesting statistic on net income conversion that we think you'll appreciate.
The final chart on this slide shows our cumulative return to shareholders of $4.9 billion over the last decade, setting the stage for what I'd like to discuss next. We've talked at length to our shareholders, and we talk at length to people such as the analyst community that talk to our shareholders as well. We know one of the things that you value most is free cash flow generation and free cash flow return to shareholders. The dark blue line on this chart shows the impressive cumulative free cash flow generation by C. H. Robinson over the last decade, going from a starting position of $300 million in 2006 to over $4.3 billion in 2016. This is actual cash flow, meaning cash flow from operations minus CapEx, not a proxy for cash flow.
Over that same time period, we returned an even greater amount of money to you, our shareholders, increasing from a starting point of just under $180 million to over $4.9 billion in 2016. The yellow line on the right is an interesting one, and it's one I referenced a moment ago. It shows the net income conversion to free cash flow. Over the last decade, we've generated a total of $4.6 billion in net income. During that same time period, we've generated $4.3 billion in free cash flow. Put it another way, almost every dollar of net income that we've generated has been converted to cash. Cash that we've used to further grow the business, and cash that we've used to reward you, our shareholders. This is one of the great powers and great benefits of the company, of the model, and of our people.
The good news is that it works in many economic conditions. We talked about the income statement and the cash flow statement. Let's spend a little time talking about an important item on our balance sheet, debt. This page shows how over that same time period, from 2006 to 2016, we started in a net cash position of roughly $350 million. During that time period, we've transitioned that from a net cash position to nearly $1 billion in net debt. We've used both the strength of our business model and the results that our people generate to leverage our balance sheet to simultaneously grow the business as well as return capital, and therefore drive up returns on equity. We continue to be comfortable with our current debt levels, and we would further be comfortable going above those debt levels should the right opportunity arise.
One final slide on capital deployment before moving into segments and strategy. Here again is a longer-term view of where and how we've been deploying capital, both organically as well as M&A. I mentioned earlier the importance of mergers and acquisitions to drive both operating results as well as free cash flow. You can see that since 2006, we've deployed $1.3 billion in mergers and acquisitions. We've acquired three companies during that time period of note. Obviously, the largest ones that Mike will talk about is Phoenix International. We did that in 2012, and in 2015, we acquired a company called Freightquote. Bob Biesterfeld will talk about that in the NAST strategy. Finally, at the end of 2016, we acquired a company called APC, which is our Australian and New Zealand operations in the Global Forwarding space.
We think those are a tremendous benefit and a tremendous add to the overall organization. We've also, as John mentioned, committed capital to organic growth. I would point out again that these figures are cumulative. Over the last decade, we've only spent $490 million in capital expenditures to produce the type of free cash flows, to produce the type of net income that I mentioned earlier. It's interesting to note that there are companies that are out there today that are in our space that spend more than that on an annual basis to generate their returns. We talk a lot about the business and the importance of leadership and the importance of the work that we're doing as an organization. For the first, essentially, 80 quarters of us being public, we reported it as one segment.
Starting two quarters ago at the end of 2016, we began to report as segments. We did that for several reasons, and I think they're important to note and to call out. You can see the impact of it on our slide here on the left. The rationale for going to these segments was because we believe that the characteristics of those divisions that we have, their operating results, how we lead them, have all changed and developed over the last several years. As a result, we thought it was important for you, our investors, to see how we actually view the business and how we deploy capital and how we drive earnings growth as an organization. For example, in 2016, our largest segment, NAST, North American Surface Transportation, generated two-thirds of the revenue for the overall organization.
It did so, as you can see on the right-hand side, at a 17.4% net revenue margin and over 40% operating income margin. The remainder of our business, Global Forwarding, Robinson Fresh, Managed Services, and European Surface Transportation, generated the remaining one-third of our business, but did so at materially different net revenue margins as well as operating income margins. We think as you go through the day, you're going to enjoy hearing the stories from these leaders as they run their businesses. A few words on enterprise strategy, mergers, and acquisitions before going into my final slide. From a macro perspective, our strategy remains intact. We have and will continue to seek out attractive and accretive acquisition opportunities across the globe to help us fill in geographies and help us fill in and complement our existing services. We've been very successful in doing so in the past.
We've taken the time to fully vet these acquisition candidates, and we spend an appropriate amount of time integrating the companies once they're acquired. We believe that our criteria, which I'd like to spend a few moments on going through, are very important to how we look at acquisitions. The first one is cultural fit. If your very premise of your business are people, process, and technology, when you go out and look to acquire companies, you want to make sure that the companies that you acquire have the right cultural fit for your organization. It is absolutely critical to our success. The second one, as I mentioned, is strategic fit.
As we think about the globe and as we think about our services and as we think about our strategy, it is really important for us to be mindful of what is happening today, and it's uniquely important what is going to be happening in the future. We think about things like technology, we think about things like digitalization, and we think about global trade simultaneously when we go to decide where we're going to deploy our business model. Again, as I spent the last few moments talking about those free cash flow returns, it's important for us when we evaluate these candidates to ensure that they have similar free cash flow characteristics to ours. There are other companies that are out there that have a different business model.
What we've presented and what you, our shareholders, have asked us to do is to make sure that the acquisition candidates that we look at bear similar cash flow characteristics. Finally, valuation. Valuation is important. You, as our shareholders in this room, look to us to be very good financial stewards of your capital. We do so in a way that it generates when we do an acquisition, and several of these acquisitions were bought out of a process. We paid market clearing prices. We did so because we knew that we could extract additional value from it, from things such as cross-selling, from things such as integration and the like. We're very pleased with our results in the past of our M&A strategy. We believe that it's the right strategy going forward.
We have a dedicated team that is looking at an extremely full pipeline right now. In doing that, we're only looking at the deals that add value to our shareholders. We will be very disciplined, as we've done in the past, on how we go to execute those deals. Strategy-wise, to follow up with what John has said, you're going to hear it all day long from the rest of the leaders. We're investing in our people, we're investing in our process, we're investing in technology across the globe to continue to be the industry leader. As a senior leadership team, we're aligned around these subjects of digital disruption, from marketplace disruption, the existence of old competitors. We continue to hear every day of some of our investors on the sell side, so-and-so, they're still competitors.
We've been in this business for a long time and are very aware of the competitors that are out there. They're always going to be there. There's going to be new ones that enter, things like e-commerce, things like last mile delivery. We, as a senior leadership team, get together very frequently to help set the strategy for the organization as to how we're going to develop the right plans and the right processes to win in this marketplace. These are the issues that you all are focused on, we're focused on them as well. We believe that you'll leave here today with a much better and a much deeper understanding of how we're doing that.
Finally, before I turn it over to you all for questions, as well as turn it over to the rest of the senior leaders to walk through their businesses, we're affirming, as John mentioned, our long-term growth targets. For the first time now that we went to segments, you can see it by segment. You can see there with our market service strands, we believe we'll continue to grow into the long term net revenue of 5%-10%. We believe the Global Forwarding organization will continue to grow at 10%+. We believe that Robinson Fresh can grow between 4% and 8%. The other, and you're going to really, I think, for the first time, get a deeper insight into Jordan and the TMC group and Jeroen with the European service strands.
We're very comfortable and very confident in our ability to grow that part of the business 10%+ into the long term. That's a viewpoint from the operating segments. When you roll that up into the overall corporate, while we acknowledge that 2017 is off to a difficult start, as John mentioned, that's really coming from the cyclical side of our business, we believe that we can grow our net revenue and operating expenses in line through the combination of lowering tax rates and continuing our share repurchases. We believe long-term EPS growth rate of 10%+ is achievable. I wanted to thank my colleagues today. I wanted to thank all of our employees across the globe that are helping us produce these results. Thank you all again for coming in and listening, I'll open it up for questions.
Thank you. We'll get Scott here in the front.
Thanks. It's Scott.
Just on the long-term earnings rate of 10%+, it's a little bit better than the 10-year average. Is there an assumption of more acquisition going forward or buyback going forward? When we look at the long-term revenue targets, can you give a little bit of color on the gross revenue and EPS yield within those?
A lot of questions, I'll try to pardon me, remember all of them. As it relates to, I'll go in reverse chronological order. The gross revenue is highly impacted by fuel. Fuel being up 25%, diesel in the first quarter, as an example, gross revenues were up roughly 11%, that was primarily driven by fuel and volume. Our volumes were up across the system, 13%. In a cyclical environment, which impacts the net revenue, it was down, obviously, because of the impact of the pricing environment. When we think about the gross revenue growth, we know that there's going to be an impact, both positive and negative, across all those different things. There's a cyclical element to our business. The secular trend is what we've been talking about for a long time is the continued desire to take market share, as John mentioned.
We're going to continue to do that organically. There's going to be some fluctuations along the top line as those factors impact. Acquisitions will continue to play an important part of that. As I mentioned, over the last decade, we grew at 8% on the top on the net revenue line, 2% of that was driven by acquisitions. I can't give you a specific nor would I think it would be appropriate to say X% is going to come from acquisitions because we're out there evaluating Today, some are larger, some are smaller. We're going to do what we think is the right opportunity for our shippers. When you translate that into below the line, the more income that we generate outside the U.S., the lower our effective tax rate. We selected APB 23 at the beginning of last year.
As a result, the way you think about it is roughly any dollar that we generate outside the U.S. is taxed at a roughly 25% rate. Every dollar that we generate inside the U.S. currently is at 37%. A combination of, as Mike and the team will get into, as we drive results from outside the U.S., that will see a lower effective tax rate. What we will continue to do to take care of our shippers and help drive our EPS.
Just whether we need to hit 36 back on the revenue margin question and just how you think about that in the construct of the long-term growth margin, particularly for the North American business. As you see some of the disruption being more transparent to your customers, again, as you think about those three levers sitting inside the cyclicality, because I think we all agree to answer how that impacts you on a quarter year-to-year basis. Over the long run, do we end up in a period a couple of years from now where we're seeing lower margins or do you think they're sustainable in the mid-teens?
Well, I'm not going to steal Bob's thunder, because he's got a great piece on it, but I will address the thematic and the trends and the themes that we're seeing and why, I think if you go back to that slide, it's important to break out our net revenue and go to operating segments and reportable segments. You think about NAST, and even within NAST, there's truckload, and there's less-than-truckload, and there's intermodal, and there's emerging services. As we continue to grow, and let's just start with truckload. In truckload, there is a cyclical element to that, and we're obviously in that in a very difficult time. Over the long run, there's value and benefit that we as an intermediary, as a 3PL, offer to our shippers.
There are a lot of statistics today, we're connected to over 200,000 organizations, and there's value that we bring to shippers in helping them procure capacity, and there's value to that very, very fragmented marketplace that allows us to bring that to the shippers. John mentioned it, and we'll talk at length about it, is the technology is there, yes, it's important, it's still not being actively implemented on behalf of our shippers. They still want somebody to manage that business on their behalf, and there's a value that they'll pay for. Simply getting transit visibility, that's great. That's table stakes. What happens when something goes wrong? There's a value that we bring to that. The same on the shipper side. As those margins fluctuate, and there will be a fluctuation, and they're under pressure right now. We've diversified.
We have more LTL business today than we had a decade ago. Obviously, as we all know, the margins that come in that LTL space are higher than truckload. What's unique to, I think, our opportunity there is a combination of all the things that we do with our customers, helping them manage their supply chain. It's converting from truckload to LTL, from LTL to consolidating into a truckload, and vice versa. We feel very comfortable about our ability to manage margin expectation by diversification. Think about intermodal. That's why you think about emerging services. The margins on our emerging services tend to be higher because they tend to be more specialized services that we provide.
Christopher from Stephens. Just a question on the North American Transportation segment. Along providing that revenue growth there, it seems like that's a bit of an acceleration that's been going on for the last 3 years. You guys have tended to have pretty good years in the market. Just curious, once again, I'll take it to the upper end of that range. Then as we think about your past comments as well as when you think about the opportunity here in that range, market dynamics.
Well, if there's a range, that's a good question. Again, I'd steal Bob's thunder, but there's a range for a reason. We know that given the fluctuations and the variability around it. But I think that's actually the great news of the story is that we've been nearly one hour into the meeting, we haven't talked about ELDs. Bob's going to talk about them. When we think about when there's supply chain disruption that's out there in the marketplace, you're going to see margins expand because, again, regardless of how good technology is today, it's still not there. It's still not at the point where shippers and carriers are comfortable turning it all over to an app and just saying, "Okay, we're just going to start moving freight that way." There's still a lot of work that our people are doing to help manage that.
We believe, I think history has proven us correct, is that when there is disruption, that's when you get to the top end of that range. When there's what we saw in the 2011, 2012, 2013 time frame and that kind of mediocre GDP, that stable market, it tends to go towards the lower end of that range.
David Vernon from Bernstein. If we look back about five years or six years ago, coming out of the financial crisis, you guys were dropping about 42, 43 cents in every net revenue dollar in operating income. If you fast-forward to today, we're looking at about 35, 36 cents. Obviously, you've been taking a lot of share. Obviously, you've been doing a lot of acquisitions. What is it that gives you the confidence that by taking more share and buying more companies, that you're going to be able to stabilize that sort of operating income drop through for net revenue? Because I assume you would have had some benefit, synergy benefits from some of the assets.
Yeah, no, great question. If you think about the cycle and where we are is why I went back to that 10-year average. We are pretty close to where we were in terms of that 10-year average, knowing there is variability, particularly in the net revenue margin. The benefit of margins expanding, which you take both volume and it is at a higher price, you can drop more of that to the bottom line. Today, what we saw in 2016, was that we went after market share when prices were going down. This green little chart that we produce as part of our earnings, it shows that since 2008, it went, unfortunately, from a kind of an eight-year high, as you mentioned, coming out of that financial crisis in 2014, 2015, to right back down to the lows.
As a result, it had a negative impact at the compression of our margins and what we were able to drop. We are still really close to what the historical average has been. We believe that as we continue to grow and we take that market share and the pricing goes up on that market share, it is easier to keep it once you get it. When the pricing does go up on that market share, you drop more of it to the bottom line. When you then have that, you are able to offset a lot of the other costs associated with either doing an acquisition, integrated acquisition, or the amortization associated with it. PPC is a good example. We talked about it. It added about $3 million to the SG&A just in the first quarter alone. We are two quarters into having acquired that company.
While the costs are there, they are fixed. That is not going to change over the next 12 years or however long we are amortizing it. The synergies that we get will continue to rise. We saw this when we acquired Phoenix. We saw it when we acquired FreeWheel. To begin with, you all know when you do the acquisition, you get the cost, and the leverage comes one year, six quarters out into the outcome.
Bascome Majors , Susquehanna. There is a perception that the Robinson strategy is related to the very healthy cash flow you generate in your North American business and using that to supplement growth domestically abroad where there may be some great opportunities that we can operate organically here. Number one, do you think that is a fair perception of your strategy? If not, what opportunities do you have to tip the portfolio north of your core to really supplement where you are already a leader pretty much everywhere?
I'm going to go in reverse order, Ron. If you think about the opportunities, and Bob's going to talk a lot about them, e-commerce, last mile, we're continuing to make both organic as well as evaluate inorganic opportunities in North America. It's the world's largest economy. You would imagine, given our relative market share, that we're going to continue to make investments in North America. It's really interesting because if you think about, not to go too deep into the accounting weeds, but clearly we're expensing a lot of our IT costs right now because it's an existing system. It's not being capitalized and put on the balance sheet. It's actually being expensed, which does have a negative impact to our EPS and a lot of things that you all are rightfully concerned around.
We're making investments. That's directly being expensed in the next 3 years. Obviously, if you do an acquisition, you just put it on the balance sheet and amortize it. We continue to make investments in North America, particularly in the United States, particularly in Canada, looking at all aspects of North America. Taking that in, I would say that the strategy is really customer-driven, customer-led, and Chris has got some great statistics later on today, where we're winning on a global basis. I know everybody talks about what we do in North America, that's important. The investments that we make are really being driven by the needs and the desires of our customers to deal with a global provider, a non-asset-based global provider with one instance of the truth in terms of their systems and their technology.
We are making investments today and have made them. We continue to make them to drive our overall results both in North America as well as outside of North America. It just so happened that some of the results or some of the investments that we've most recently made happen to be outside the United States.
Bring it out once you're done with it. When we are considering the portfolio of potentially assets in the past, could you talk about strategic need?
I won't comment on other people's strategy. I'll comment on ours. Without flipping back to those particular slides, I'll reference them as our investors, we believe, talking to them and talking to others, that the non-asset-based philosophy is a good one. We also believe that it's a good one for our customers.
If you think about the 113,000 customers that we have and the 70 some odd thousand providers we have across all of our different services, what's really interesting is for us to be able to say to them, "We're going to solve your problem regardless of the way in which it moves, regardless of the asset, regardless of the division, regardless of any of those kind of things." Maybe if you owned assets, you as an investor in that asset would want to every day maximize the utilization and the return that you would generate on that asset. We look at it and say we've got to maximize the services that we provide to our customers. To resolve having the best technology and having the best people and having the best process are really important to helping our customers solve those problems.
Complexities around the global supply chain are imminent, and they're only getting more complex. They're not getting easier. Technology is going to help us. It's going to make our smart people more effective. You're seeing that in terms of, as John mentioned, the metrics particularly around volume versus headcount is important to us, and we track it. Going in and saying now, "Hey, we own assets," because they're very dispersed. They're very scattered throughout the entire world. Us knowing every one of our customers' needs at any time and trying to fit that into the assets that we own, we just don't believe is appropriate for our strategy.
Thank you. Any questions? Transition here to Bob Biesterfeld, President
Hi. Good morning, everybody. I normally walk through the aisles and presentations, but I guess that's not going to be an option today. My name is Bob Biesterfeld. As Tim introduced, I'm the President of North American Surface Transportation, and on behalf of the over 7,000 associates of NAST or North American Surface Transportation, I'd like to welcome you to our 2017 Investor Day. I've really got four goals for today. The first is to revisit and kind of level set the room on what NAST is, the services that we comprise, and what our network looks like.
Second, I want to provide an update to this group on some of the transformation efforts that have been underway since the last time we met, going back to 2014 and some of the steps that we've taken, maybe to address some of the questions that have already come up about what our network looks like and how those services have evolved. I also want to talk about the market opportunity that we see in front of us and talk about how we intend to attack that market opportunity and continue to expand our leadership position. Finally, I'll close my half hour or so with some room for questions. I do want to take the time to share what you should expect from us. What are the things that you should expect from us in terms of trends in our overall business?
I'll start with our services. As you know, about 99% of the revenues of North American Surface Transportation are generated from truckload, less than truckload, and intermodal. Each of those core services has a unique story. When I think about our truckload service offerings, I'm proud to say that we move more truckload freight than anyone else in our industry. That's a differentiator for us. Truckload, we serve over 47,000 unique customers, and those customers range from the smallest manufacturers to some of the most complex global companies in the world. When the majority of our truckload freight is dry van, we're proud of the fact that we also maintain one of the largest service providings of temperature control transportation as well as flatbed transportation. Our truckload service offering is a diverse portfolio of services within itself. LTL is one of the great growth stories within Robinson.
20 years ago, when we started in the LTL space, it was really about reselling common carrier LTL capacity. Today, while that's still a big part of our business, LTL is comprised of really specific consolidation programs for strategic industry verticals like food and beverage, like automotive, and like retail. LTL has continued to become one of our largest services in terms of volume. Today we serve close to 90,000 unique customers with our LTL service. What was once somewhat of a manual process is almost now a fully automated process. With the acquisition and the integration of Freightquote from a couple of years ago, we now have the ability to deliver a fully automated LTL solution to our customers that allows a customer to go online, place an order, and have that shipment track all the way through to the carrier through delivery without any human interaction.
Now that we've integrated that Freightquote technology into Navisphere, we're able to continue to expand that service across that customer base. Intermodal makes up about 2% of our overall revenues within NAST. Albeit the smallest of our three core services, it's certainly of strategic importance to us. Having those strong relationships with the Class One railroads allows us to sell an integrated service to our NAST customers, which is a further point of differentiation for us. In Andy's comment, he mentioned this concept of emerging services. While emerging services only makes up about 1% of the revenues of NAST, what emerging services is really our team. It's our incubator. It's where when someone asked the question earlier about where does the innovation come from, where that customer-led innovation and our employee-led innovation come together.
We fund those emerging services ahead of their revenue contribution, so we can bring those next services to market for the benefit of our customers as well as return to our shareholders. Given the importance of-- Is it working? It's reading through, Matt said. Thank you. Given the importance of truckload to our overall network and our overall services, I thought I'd spend a bit of time talking about the U.S. and the North American truckload network and how we interact with those carriers. I know this is a bit of a busy slide, but I want to walk through it with you. Based on the research that we've done, we estimate there to be about 206,000 active for-hire motor carriers within the U.S. What this slide attempts to do is depict how those motor carriers are distributed across the size of those businesses.
What you see is that about 89% of the for-hire motor carriers in the U.S. own less than five pieces of equipment. These are very small businesses. You can see that close to 90% of the trucking companies in the U.S. own less than 50 pieces of equipment, also smaller businesses. Just 1% of the trucking companies in the U.S. actually own more than 50 pieces of equipment. When I think about how we do business with these motor carriers, we do business with about 25% of those smaller carriers. We do business with virtually 100% of the carriers with greater than 50 pieces of equipment. It's the smaller carriers that move about 85% of the freight that we move for our customers. This is important to think about this question of disruption, this question of digitalization. It also plays into the ELD question.
What happens when, right? That's the question that everybody asks. We feel that we have a large carrier base that's untapped within the U.S. carrier base. Even though we're the largest, we have huge untapped carrier base to continue to work with. If market conditions shift, we can shift between smaller carriers and larger carriers. It's our effort within this carrier base to have technology solutions that deliver value forward to our customers as well as back into these carriers. The smaller carriers, the smaller businesses have less technology than do the larger carriers. They have less efficient networks than do the larger carriers. As we think about investing our technology dollars on behalf of the carriers, we do that in order to make these more connected. We do that in order to help these small carriers connect to freight and run more efficient businesses.
Keeping in mind that many of these small carriers have up to 20% of their miles running empty. They come to us because of the network effect, that we can help them become more effective. I think it was Tom earlier that asked a question about our NAST footprint. We talked about it historically, about 150 offices, sometimes operating somewhat independently. Our NAST footprint has continued to evolve and it's continued to change. This is one of the things that's gone on since the last Investor Day. Today, we no longer have 150 offices because we've made some decisions in geographies and in regions where we had offices in close proximity to bring those offices together, to consolidate. We do that to gain leverage and to gain scale. We've also made decisions around some of those offices that were in non-strategic or underperforming locations to close those offices.
The evolution of our NAST network isn't necessarily about the number of offices that we have at any given time. It's really about how we've chosen to lead, structure, and organize our network. Today, we don't talk about 150 or 130 independent offices. What we really talk about is eight scaled regions with the Freightquote acquisition. That's how we view and that's how we lead our NAST network. By doing this, it's allowed us to be more agile. It's allowed us to develop and deploy technology with greater efficiency and greater acceptance. It's allowed us to drive strategic change through our business models more effectively and with greater ease. What we've also done over the course of the last couple of years within the NAST network is we've changed the internal structure of what an office looks like.
Historically, we were more of that, what we would call in the business, the cradle-to-grave model. Essentially, everybody did everything. It was very difficult to measure performance in that model. It was very difficult to measure efficiency in that model. It was very difficult to attract and retain talent when people wanted a specific career path. We've moved over the course of the last few years to a much more specific role-based model or functional-based model, where we put focus on having a career in sales, a career in account management, a career in operations, a career in the carrier job family. By doing that, we've been able to provide greater career paths for our people, and we've been able to provide very specific performance measurements. These things have made a difference. Today, this NAST network, as I said, is made up of eight regional centers.
This is a network that moves over 11 million shipments per year. It's an immense number of shipments that flow through this network. This is a network comprised of almost 7,000 employees that generated over $8.7 billion in revenue in 2016. The evolution of our network is not complete. It will continue, and I'll talk more about what that looks like. As we look at our network of the future, there will really be three main components to it. There will be scaled operational centers. These exist today, but they continue to grow in size. Where we're moving task-oriented processes into those scaled operating centers where we can achieve a lower cost and higher quality environment. By scaling those tasks, we can also simplify, centralize, and automate those tasks and extract cost from the model. The other component of the future network, we'll continue to have sales offices.
Having those offices close to our customers is extremely important to us. Having the ability to sell locally and be present in the communities that we serve is extremely important to us, and we see it as a competitive advantage. We will continue to scale the carrier procurement function through scaled centers, through virtual designs, like many of you have seen in Chicago or Kansas City. Sales, carrier management, and operation centers will be the core components of that network in the future. I do want to reinforce, though, that the network is comprised of people. Because if I go back to John's opening comments, the people part of our people, process, and technology is still really important to us. Advance the slide, please. Let's talk about the results of this.
It's good to say that we've changed the network, we've got to be able to put some points on the board. If I go back and make some comparisons to the beginning of 2014 until today, there's some very specific results that we can see. Our salespeople are making 43% more sales calls and conducting sales activities today than they were at the beginning of 2014. When people ask me, "Why is volume growing? Why is market share growing?" One of the simple answers is we're selling more today than we ever have in the past. 43% more than we were in 2014. When we think about productivity, orders per person per day or loads per person per day are up 11% over that time period.
Through the specialization of that carrier job family and the people that are negotiating rates and managing those carrier relationships and dispatching shipments, we're booking 23% more freight today than we did at the beginning of 2014. Aggressive statistics. The network transformation has been delivering scale and delivering advantages. We also talk about organizing ourselves differently and centralization of functions. One of the areas we've put a lot of focus on is bringing together common processes and leveraging learning algorithms around truckload pricing to become more effective. Through the centralization and standardization of that process, this year-over-year, we've increased our win rates on large truckload opportunities by over 400 basis points. That's significant when we see literally billions of opportunities of truckload bids coming through our opportunity funnel. Gaining scale, one of the ways we look at that is what is our personnel expense per order?
I'm happy to say that over the last 9 quarters, that personnel expense per order, per shipment that comes through our system, has declined on a year-over-year basis. All positive signs about the foundation of the work that we've been doing. Now, obviously, the financial results for NAST haven't been where we've wanted them to be or expected them to be over the course of the past few quarters. I'm confident that the work that we've been doing to lay the The thing that I want to leave you with around this concept of transformation is that with all the conversation and all the talk about digitalization and digital disruption, the work to digitalize the NAST network isn't just starting today. It's been underway for the past several years.
If you consider a snapshot of what digitalization looks like for NAST today, can we go back, please? Think about the fact that on any given day, there's over 6,000 motor carriers engaged with our Navisphere mobile carrier app that we launched last year. There's over 16,000 motor carriers engaged with Navisphere Carrier Online. These are motor carriers that are looking for loads, providing automated electronic status updates, helping to manage their business. In any given quarter, there will be over 50 million searches on those two devices, those two mediums, of carriers in our system looking for loads, 50 million times a quarter carriers are in our systems looking for loads. Beyond that, excuse me, we've worked on extracting processes from our offices, trying to automate the internal processes.
Last year, we had over 98 million processes like driver status updates, location updates that flow through our system in an automated manner. That's up 40% on a year-over-year basis. The digital transformation of NAST is underway. We can go back and talk about Freightquote again. We had over half a million shipments tendered through that Freightquote model with no touch from order to delivery. The stat that's not up here, but I think is really important is with all those carriers interacting with us via the web and via mobile, we can see that there are over 1.5 million instances, 1.5 million loads last year where a carrier went online, viewed a load, with one phone call, talked to their managing carrier rep, and booked that same load.
Some might say that that's archaic, some might say that you're still involving a phone. I'll tell you that that one phone call is in many cases what ensures that we meet the quality expectations of our customers and that we deliver on the expectations. Sometimes that one phone call, which is highly efficient by the way, is the thing that allows us to make sure that that carrier has the right equipment and can execute legally and on time the things that we expect them to do. Let's talk about the next slide, which is opportunity. What gets me excited about the opportunity to lead our NAST network is simply the enormity of the opportunity that exists in North American logistics. Looking at just the U.S. alone, there's over $725 billion worth of
If you consider the market size that I just shared with you of NAST being at $8.7 billion, we're less than 1%, or we're just over 1% of that total spend. If we consider just the for-hire segment, we're about 2% of that spend. The $725 billion spend is comprised of customers of all sizes, right? Small customers who lack technology infrastructure, who primarily play in the spot market because of the behavior of their networks. We've gotten the most large, complex, and global customers that we interact with that are highly automated and highly integrated. We have the opportunity to provide services as we do today across that customer spectrum.
To match that millions and millions of potential customers that exist out there in a marketplace that we only have 2% of, with this completely decentralized carrier base that I just shared with you, with over 200,000 carriers, you layer in the fact that there's inefficiencies built into both sides of that model. That's where we see the opportunity for NAST to continue to be. I think it was John or Andy that said, we consider C. H. Robinson has been a platform. C. H. Robinson has been a platform. NAST has been a platform. How that platform connects and automates and derives value from both sides of that equation will continue to evolve. I want to stress again, it's not just about the connectivity or the digital side of it.
It's about having the expertise, it's about having the experience, and it's about having the ability to step in and solve problems when things don't go according to plan. We've been doing that for years and will continue to do that moving forward. Frankly, when you look at this, the market opportunity and how great it is, I see this almost being the reason why those non-traditional competitors that we're talking about are coming in. It's not about the 2% market share that Robinson has. It's about the tremendous market share that exists out there broadly and the opportunity to continue to organize and drive value more effectively to that. We see that opportunity.
We believe that we have a unique opportunity to win and expand our market presence there because of the installed user base that we have, because of the 112 years of experience that we have, and because of the trust that our customers put and our carriers put in us every day. The fact that we've been growing market shares as aggressively as we have for the past several quarters, I think, is a testament on our team's ability to win. I think it's a testament that even in this extremely hyper-competitive marketplace, we are still winning. Yes, there was margin compression over the last couple of quarters. That is, I believe, a cyclical thing. You all cover and we all see many other competitors in our space that also experienced significant margin compression over the past couple of quarters.
Those same companies didn't take market share at the same rate that we did. Let's talk about what we believe about the future. It'll shock everybody, but we do think that e-commerce is going to continue to change the supply chain. As e-commerce changes consumer behavior, consumer behavior changes the supply chain. Today, we see the supply chain continue to become shorter and more transparent as people expect real-time visibility to inventory in motion and next-day delivery. We also see the supply chain becoming more global and more complex. Within NAS, we can execute on both sides of that, and by integrating services with the other business leaders that you'll meet today, we can solve for that global solution by integrating our services and delivering that together.
We believe that data symmetry matters. I'm going to go back to where I started about the supply. 7 million shipments. In order to execute and win 11 million shipments, we do a lot of quotes. We capture millions and millions of sales quotes, both winning and losing inside of our model, which helps us to think differently about how we predict price. Having those 11 million shipments helps us to think differently about service execution and quality. Having those 11 million shipments gives us access to hundreds of millions of supply chain events throughout the supply chain that we can capture and feed into machine learning to learn and become more prescriptive, more predictive, and more intelligent. We really believe that those that have that data advantage and can harness that data will win. We feel like we're in a really good place there.
We believe that the speed of technology development advancement are going to continue to drive change in how business is executed. We're at the forefront of that technology development. We've been doing that for years. We do believe that automation will continue to advance, and we're going to be able to deliver new service models at lower costs than we've ever thought had been possible. We believe smart people still matter. All advancements aside, people like dealing with people that can solve their problems. I'm confident in our NAST team, like I said, of almost 7,000 associates, that we've got some really smart people and are part of our competitive advantage. Finally, we believe that that 3PL space is going to continue to grow.
The 3PL space has obviously outpaced the overall growth rate of the marketplace over the past several years, and we believe that, frankly, some of these new entrants into the marketplace will even further cement the importance of the 3PL market space and will help to redefine where we can play. I want to share with you a bit about the vision for the NAST organization. John shared with you our enterprise vision. Our NAST vision is very closely aligned to that. As we talk to our teams internally, I think it's important that we have the same internal message as we have externally. When we talk to our teams, we talk about leveraging our history as the original 3PL. I think we're the only company that can say that we're the original 3PL.
Building upon that history as the original 3PL in order to create the capabilities that relentlessly reinvent the industry. That's a bold statement, but it's what motivates us. It's what gets us out of bed, and it's what gets us to work every day, is coming in to create the capabilities that relentlessly reinvent the industry for the benefit of our customers, for their carriers, for our stakeholders, and ourselves. There's kind of four core tenants on how we intend to do that. These four core tenants are going to guide our investment strategy. These four core tenants are going to guide where we spend our capital internally. These four core tenants are going to guide where we add human capital to our model as well. As first, I talked a bit about our network and our model.
We're committed to continuing to reinvent our model, not just transforming, but reinventing that model. We're going to hold onto the things that have made us great for the last 112 years, but also not be afraid to shed some of the things that have maybe got in the way of accelerating change and growth. That's about re-engineering our process. It's about evaluating our footprint, evolving that network, and thinking differently about how we deliver service to both customers and carriers. The second core tenet is around delivering world-class execution and customer experience. World-class execution has been a core part of what's made C.H. Robinson successful for a long time, and this is a commitment from us internally to double down upon that. World-class execution is how we'll do things internally.
Customer experience is how the customers will experience that on the outside, whether that be as simple as how we answer the phone every day to how we develop our technologies to be world class, how our customers experience them, to how they leverage our analytics to make better decisions about their business. Someone asked questions about this earlier, how will we invest in our core services of North America? I mentioned earlier, 99% of our business is generated by truckload, LTL, and intermodal. We know that there's still opportunities to expand the services associated with truckload, LTL, and intermodal. We'll do that organically. We'll also look to do that through acquisition.
We also know as supply chains change, some of the things that we talked about in e-commerce, there's opportunities to continue to invest in those core services and expand those core services into verticals where we may not be today. We're strengthening our ability to serve the ever-changing supply chain. I talked a bit about this, leveraging that data. We have an immense amount of data that we feel that we can use even more effectively in the future and leverage machine learning in different ways, continue to bring AI into our business and drive better decisions for ourselves, drive greater efficiency, and help reshape what we offer to customers. Later this afternoon in the technology demonstration, you're going to see an example of how we've expanded the Navisphere platform in new ways that can redefine how we go to market with our customers.
I'll close and hopefully leave a couple of minutes for questions. I'd like to share just a few things you should expect from us within NAST. First and foremost, as I said, the digital transformation of our business is not just beginning, but it's also not complete. As we move forward, we're going to continue to focus on taking market share. We're going to continue to focus on taking market share because we believe that that's the right thing for our business. As we take that market share, you should expect us to do that at a rate ahead of our headcount growth. That hasn't always been the case in the past within C.H. Robinson, if you look back. Headcount growth and volume growth have tended to trend pretty closely together.
Moving forward, that volume growth should come at a rate above headcount growth as we continue to find ways to leverage and gain scale in our model. As we increase our technology in NAST, the technology investment in NAST, you're going to see us continue to stand up new self-service modules for both customers and carriers. You should expect us to continue to deliver more digital processes to clear processes that have been human managed or manual in the past. We can see the opportunity in front of us there, and we're hyper-focused on that. We will continue to look aggressively at M&A. We have a full pipeline, and we're continuing to look at ways that M&A can help build upon technologies. We're strengthening the core. Finally, we are committed to creating that value. Creating unique value is a competitive differentiator through people, process, and technology.
We'll pause there, Tim, I think you're ready to open it up for questions.
I will start here. On a slide up at the beginning, you talked about the size of the carriers in terms of and you talked about your flexibility and ability to move to the different carriers here depending on the environment. I think you said something to the effect of there's a large carrier of these technologies and really what's going to happen to it. First thing. The second thing you said, the past financial results have not been what we wanted them to be the last few quarters. What you decided to do?
Let's start with the ELD question and the carrier base question. The first thing I would say about this carrier base is there's obviously a lot of questions. We hear questions on the health of the small carrier and what is going to happen with the small carrier when ELD is gone. The one thing I would say about small carriers is that on a quarterly basis today, we're adding about 3,000 new small carriers to the Robinson network every quarter. On average, that fleet size is about two and a half. We're not adding 3,000 Schneider. We're adding 3,000 more operators, small companies. But after a really easy sign-up process, those carriers go right to work for us. Typically, that group of new carriers every quarter move about 15,000 to 20,000 loads for us in the first quarter they're with us.
The direct question about ELDs, the answer from me is that while I don't have a crystal ball, we do believe that there will be some disruption to the overall network. When you think about some of these smaller carriers, because their networks are less efficient, they simply have so many empty miles, we think there will be disruption there. I don't have a good round number if it's going to be a 3% disruption, a 4% disruption, or a 5% disruption. In general, we think that there will be some disruption to the supply chain due to lost efficiency from those carriers. With that being said, we also believe that over time, the network will adjust to that, just as it always has.
Whether that was, if we go back to the beginning of 2014, where we had the snowmageddon, rates went up, supply was constrained, things found equilibrium over time. We do believe that the market will adjust to this. The other question, too. One other quick question on results of the business over the past three quarters. Recently, so much of that has been cyclical around margin compression in the core North American truckload business over the course of the last three quarters, that that's really been the variable that's been cyclical versus core in that.
Right.
Bob, Brian Ossenbeck from J.P. Morgan. You wrapped up with talking about new self-service modules, digital processes. Can you give us some numbers on LTL and how much of that is automated from start to finish? Also, maybe give us some context with the TL business you mentioned, some of the loads are being booked by just the but how far along is it from book to point with touch? And just give us some sense of parameters and how much of the business can actually be digitized versus how the impact has been from stealing equipment or some other connectors, and just how far along you think you are on that front.
I'll answer that a couple of different ways. The first is if you think about the operations we execute on, the inside of the things that you have to do to execute it, a little over half of our truckload business today is transacted between carriers and Robinson in an automated fashion. In terms of the true auto tender, real freight matching, allowing carriers to self-select shipments and then go through, we see that having an application for a broad piece of our business. We wouldn't say it's the entire business. If I were to give you a round number, I'd say there's an opportunity for 20%-30%. Again, we're testing and learning, we're in beta test right now, Brian. We've tried that with the Freightquote module, and we're in and out of it over time.
We're trying to find the answer to that exact question internally as we're asking Brian to figure out where we can leverage that. We are looking at doing some beta testing to figure out the acceptance based on carrier size, based on customer type. It's certainly one of the things that's in scope of our focus.
One more for me, here with Morgan.
Thanks, Bob. Carol Martins from Stifel. Just a question on the whole vetting process that you go through to qualify carriers, in an environment where safety is so important and compliance with hours of service rules is important. There is a rap against the brokerage industry, broadly defined, that many of the 650, 700 mile, 750 mile legs that are moved, which are difficult to move legally within one day, comply with hours of service, are handled routinely in the brokerage industry. What's your view on all of that? How do you make sure that you're dealing with the right carriers? If those carriers can no longer bend the rules in certain circumstances, are you going to have to adapt your sourcing process to still serve those needs?
We have maintained Will they sign our master freight brokerage contracts, and what's included in those? Obviously certain indemnities for our customers and expectation that the carriers are following those state, local, and federal statutes. The question of the ELDs comes in here again, as ELDs become more mainstream, kind of the balance of how much information is transacted between the carrier, the ELD provider, and the industry at that point, and how much information do we want transacting back and forth? What are some of the potential risks around things like carriers' liability by having that information? We certainly on every single shipment that we tender to motor carriers, we tender those shipments to them with the expectation that they're going to handle those shipments legally.
We do the best that we can to validate that on the front end that they have the hours of service available and that they are accepting that understanding the terms. Today, we're not capturing logbooks from drivers. We don't feel that that's our expectation. That's the trucking company's responsibility.
Thank you, Bob. Sorry, I know there's a lot more questions. Again, we'll have other forums through the day. John, Andy, Bob, thank you. It's been a productive morning session. We have time now for a 15-minute break. We're pretty much right on schedule. 10:45, we'll be back in here and get started. I should note, I should have mentioned it earlier, these slides are available on our investor relations website. They'll be posted out there for some time to come, as they are posted on the webcast as well. You'll have that as a reference. We'll see you back here at 10:45.
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Give it one. All right. Nice job staying on the clock. Probably a few people coming in. Let me introduce Mike Short, the President of our Global Forwarding business. Same format here through the next presentations, although a little bit shorter time. We have four in this next block here, so probably a little bit more challenged to stay on time, but I'll do my best to do that. With that, Mike, I'll turn it over to you.
Thanks, Tim. Good morning. It's a pleasure to be here, and thank you for taking the time to listen about our business. A brief history of myself, since most of you don't know me in this room, is I started in this exciting industry back in 1997 with a company called DCL, which was an ocean export consolidator. Today, they're called Vanguard Logistics. In 1998, I went into sales management at Phoenix International and worked my way up to Vice President of North America until 2012, when we were purchased by C. H. Robinson. I stayed Vice President of North America with C. H. Robinson until 2015. The last 20 years, the industry has changed, for sure, but the fundamentals are the same. There was less volatility in the market back then, but customers still wanted value, and they wanted visibility.
I feel our competitive advantage is our team culture, and that is increasingly rare amongst the multinationals within our industry. This slide here shows you a little bit about our footprint, but our industry is not just containers and airline pallets. We relentlessly transact across global languages and cultures to deliver the services our customers need. We provide visibility to the supply chain and manage spend and risk in an ever-changing environment. This is done in our core services of air, ocean, and customs, with over 4,000 employees in 31 countries. While we're almost exclusively a company store model, we do utilize exclusive agent in about 6% of our moves in areas of the world that require a high degree of local market specialization to best serve our customers.
We will continue our double-digit net revenue growth through expanding our market share and pursuing many of the initiatives laid out in this presentation. First, a quick history. Robinson started getting serious about Global Forwarding in the mid-2000s, and we doubled down with the Phoenix acquisition in 2012. This explains our net revenue milestones as we hit $100 million in 2008, $300 million in 2013, and $400 million will be surpassed in 2017. That will happen with the help of recently acquiring APC, as well as a focused sales strategy. Acquisition integrations in our industry are extremely tough, but we have shown that we have what it takes to make it successful with both the Phoenix and the APC acquisitions. This is proven by our volume growth since 2012 as well. In 2012, we moved 450,000 TEUs of ocean freight and 100 million kilos of air freight.
In 2016, we moved 700,000 and 144 million respectively. That's a growth rate of 55% in ocean freight and 37% in air freight. We are very proud of the progress that we've made in the last few years, and our volume gains are outpacing our competitors at this moment. As you can see, we are very strong transpacific, but we are making key investments in our people, our technology, and our network to expand our strengths. An investment example is having product experts available at all times to assist our customers as well as our employees. I will speak about ocean and air in the next two slides, but I wanted to talk about customs now. We have in-house licensed customs brokers in every location, and some locations we have multiple.
We ensure they are trained and audited on a regular basis to keep up with the diverse customs regulations that allows us to manage our customers' risk. In addition to growth in our traditional air and ocean customs brokerage service, we've recently had significant gains in volume with our cross-border customs brokerage product, achieving year-over-year double-digit growth percentages for both U.S.-Canada and U.S.-Mexico trade lanes. The freight forwarding market is estimated to be about $500 billion in total. The next two slides here will show that we have plenty of room to grow. Compared to our competitors, we have been in the forwarding business a short period of time. In that time, we have become number one from China to the U.S., and we will use that experience to guide us to grow market share globally. We are gaining traction in India, Europe, and LATAM by having disciplined in sales.
Our carrier strategy is one that has our volumes balanced across the alliances. Our carrier management team ensures this and maintains our relationship with the carriers. It currently is made up of about 23 people globally. We differentiate ourselves from our competitors by not having low-margin warehousing and by having smaller volumes in low-margin lanes. Our air product has the highest growth rate in volume out of all of our products in the last couple of quarters, with the last quarter alone being up almost 30%, without including the APC acquisition. We are taking market share from our competitors. This can be attributed to the air initiative we started two years ago that involved educating our sales force, centralizing our pricing strategy, adding experienced talent, and strengthening our gateways globally. As we continue to grow critical mass, we will also increase our margin in this product.
Our market share is very small, allowing for continued growth. We are expanding what we have learned in the air initiative in North America to the rest of the world to accelerate our growth as well. Additionally, we have invested heavily in our consolidation and deconsolidation infrastructure by expanding our Chicago warehouse to 230,000 sq ft. Our long-term goals are to accelerate global commerce, leverage scale, and grow our global presence. We accelerate commerce by making supply chains more efficient and reliable. We provide solutions that will speed new products to market, give customers constant access to the data that matters, and give global reach. We leverage scale by connecting people and creating networks. Aside from our global office and agent network, a large component of that is our global relationship with our carriers that we take great pride in. Supply chains are global and ever-changing, and so are we.
Our people view our customers' supply chains globally to make sure that we are effective. These five initiatives on the screen are what we are focused on for 2017 to achieve our long-term growth. We will continue to utilize our proven integration process to fully integrate APC into our network and onto Navisphere, our one global system. We continue to capitalize on our global customer portfolios and cross-sell Global Forwarding to our service lines. This year alone, we are on pace to generate about $20 million in net revenue from those cross-selling relationships. I already spoke about our air initiative, so I won't address it further here. That leads me to digitalization. Technology is an important piece of the puzzle. The buzz of startups in the industry and their focus on data can undermine the role that a fast network plays in the global supply chain.
We will continue to develop cutting-edge technology that makes it easy to do business with C.H. Robinson. We win because of our people, process, and technology. The digital transformation that is happening in our industry cannot be ignored. Digitalization for us means incorporating all technology into a solution that provides ease and business intelligence to all of our customers. Our people stand to gain from digitalization. They can shift their focus from task and into building and transforming their customer relationships. Ultimately, this will lead to a deeper customer relationship and more efficient operations. Some of the current technology products that we are working on within Global Forwarding is Unified Vessel. A Unified Vessel is where, if there's a change in a vessel sailing, we will update the vessel, and that in turn automatically updates all the containers on that vessel.
In some cases, we can have hundreds of containers on a vessel. The other one is proactive supply chain management. We do that a lot through PO management. We look at the milestones that are important to our customers, and we manage those milestones based upon things that could potentially disrupt it or that has disrupted it. We make a plan together with the customer. The other is Navisphere Rating. Navisphere Rating is an online platform that gives us a much faster response time to quotes. At the same time, eventually, once that quote is accepted, it will automatically download into the file for less data entry as well and less mistakes. Last is one global system. One source of the truth, one data entry point. These projects, and more to come, are created at all levels within our company.
We support the elevation of these ideas through innovation days that have global participation. We recently had an innovation day that led to more projects enhancing our people, process, and technology. The process started with about 400 ideas. Those ideas were voted on and narrowed to the top 10. The top 10 ideas were presented to leadership, and we chose the projects that we wanted to take to the next level. This process creates a unique opportunity to not only make us better, it allows our employees at all levels to give guidance in our future direction. To sum it up, we've just began to scratch the surface of this vast Global Forwarding market. We will continue to grow through efficiencies created by digitalization, by having disciplined sales, using our proven integration process to make additional acquisitions where it makes sense, and to focus on our customers.
Thank you.
Thanks, Mike. We'll open it up for questions. Matt, get things started.
Great. Thank you. Just going back to your comments on cross-selling, $20 million, I think you said in net revenue this year, planning cross-selling initiatives. Is there more to go there over time as you move forward? Thinking about the map and opportunities for expanded share, is that something really to expand in from an organic perspective, or really do you need to have some acquisitions in some of these larger lanes to really get the scale you need to be successful?
Thank you. We do think that there's much more room to go in the cross-selling. In fact, we've purposely taken it very slow to make sure that we are strong operationally, that we know what they're dealing with Robinson and another sector, really understanding what they do and what they need. We've purposely taken it slow. We have just recently, this year actually, have proactively started to go out and get more of that business. There's a ton of room to go there. The other question, every market is different globally, for sure. We do feel that there are certain markets, Europe is a perfect example, where scale means everything. That seems like a logical place to start focusing on so that we can remain competitive.
We still have, I mentioned this in the last two years, we have a lot of interest in Mexico as well.
Ravi. We've recently seen a couple of global e-commerce giants vertically integrate into this business. I'm wondering how you see those guys participating in this business over time. Do you think it's going to be mostly internal, or do you see them being external players as well? How are your customers talking about it or approaching them? Where do you think e-commerce can be from here personally, from your point of view?
That's a good question. We take the stance that we still value the human interaction with our customers. We think that's valuable. I think that the technology side of that e-commerce is going to change things, and change how we do things. I think it's going to change a piece of what we do. I think that as complex as a global supply chain is today, from a compliance standpoint, and just all the different points that you have to interact, we still value the human interaction that we have today. I don't see that changing.
Yeah. Tom Wadewitz with UBS. If you look across ocean forwarding, air forwarding, and customs, where do you think there's the most amount of touches and inefficiency today, and the greatest opportunity for technology to drive productivity for C.H. Robinson and potentially the competitors with that technology too, as you take this dynamic going forward?
I feel like the area for the most improvement would be on the ocean and the air side from the data entry standpoint. Data comes to us in many different forms all the way up to booking. I think that there's plenty of room for us to improve in that data entry spectrum for both air and ocean. Customs today, we feel is probably the highest technology that we have today. To answer the question, I believe air and ocean would be the area that we can improve and create more efficiencies the most.
Thanks again. [Steve Rawlings]. Thanks. Ken Hoexter from Merrill. Talking about, I guess maybe the Amazon disruption that you probably were getting at, given the size and as they move in, they've talked a lot about the capacity they're buying on the ocean and trying to get customers to come in. I just wonder, are you seeing that already? Is this the same as the core truckload business where it's about small providers and a fragmented market, or is this more about just simply capacity and pricing, not just on the global trade side, but more on kind of the specifics on the ocean subject?
Amazon is also a very big customer of ours. We work together well with them. Again, I just feel like as you try to commoditize that, I think it's going to be very difficult in a global supply chain. With the ocean pricing, I feel that it's been very volatile in the last year. It's getting to a point where it seems to be starting to stabilize a little bit more with the alliances. We stay close to our carriers, and we have a really good relationship with those carriers, and we have people that that's their only job, is to understand what the future of pricing is going to hold, and we try to negotiate the best we can for our customers.
David.
Hi, David Vernon with Bernstein. Could you share with us kind of the breakdown of that 60% of your ocean revenue? How much is full container and less than container? Whether you think the creation of these alliances and the concentration of more supplier power if those carriers start to go direct to the customer and invest in direct booking technology. How does that change your outlook for the ocean forwarding business?
Of the 60%, probably around 80% is full load. The rest is LCL. What was, I'm sorry, the second piece?
The second question is around the ocean carriers themselves going and investing in direct booking capabilities. Obviously, the ship industry doesn't make any money. Forwarding has a relatively good return, to the extent that the suppliers kind of control a little bit more of the capacity and start to think about how do they go directly to that group of customers that forwarders have traditionally served. Do you see that as a risk to your long-term business?
We do not. What we've seen in the marketplace is actually the opposite. We're seeing those people that used to be BCOs going direct to the carriers, coming more to the forwarder side for the customer service. A lot of what we've actually seen there is cutbacks on the customer service side of a carrier to the point where they're not getting response time. They can't get a hold of anyone. They're coming to us there. Ten years ago, probably our largest customer on the FCL side was 10,000 containers. Today, we handle customers that are 10,000, 15,000. That would've been the norms of 10 years ago. Carriers have had to grow.
When you think about air and ocean market share, when you said air and ocean is going through a forwarder today, can you see that evolving? Is that kind of in the Amazon business? Is that what they're doing is any different than a big shipper that goes direct to an ocean carrier that doesn't use a forwarder? Just maybe just separately hearing more about things like
I'm not sure on the data in our markets for both air and ocean. It's a little bit difficult to get. I'm not sure on the percentage that is gone through NVOCCs versus direct. What Amazon has done is different than what a BCO would do. They're actually starting their own NVOCC. They are an NVOCC, and they have their own aircraft airplanes as well, leases. That's different in the fact that they can actually sell an NVOCC service, exactly what we do. That's different than what we're offering to BCO. BCO is just their own freight forwarding. Again, back to technology, our outlook for the foreseeable future is really that we put a high stock on our people, and we think that they're going to be a part of that regardless of blockchain or the technology that comes about.
Okay. Mike.
Yes, sir.
I now introduce Jim Lemke, our President of Robinson Fresh.
Thank you, Tim. Good morning, everybody. A little bit of background. My career in the food industry really started when I started bagging groceries and stocking shelves back in high school and college. I feel like I got an early education on consumer demand and how it affect us and grocery supply. While I don't necessarily feel like I planned it out, I think it perfectly positioned me for the last 27 years here at C.H. Robinson, and the last 14 years leading the original business, Robinson Fresh. There's been talk about segment reporting here today. Andy and John both mentioned the new segment reporting. I suspect that historically, the reporting for the Robinson Fresh division has made it a little bit difficult to see the total value and contribution to the company.
I'm excited today to talk about that and also shed some light on the value that we provide our customers and the marketplace. Robinson Fresh, as I mentioned earlier, is C. H. Robinson's original business. Similar to the way that we aggregate carriers and capacity, we've been aggregating small and medium-sized growers for the last 112 years. Bob mentioned the original 3PL. Produce is the original deregulated freight, and we've been managing shippers and receivers and control needs for a number of decades. All of us travel, we're all on the road a lot. We're all also consumers. Consumer demand for fresh has really been on the rise lately, I'd like us all to just consider for a moment, because we eat a lot of food away from home, we eat at home, et cetera.
If you think about the food that you've eaten, we'll eat some lunch today. There's a lot of fresh food in that lunch. You've had a lot of fresh over the last week. Think about where those ingredients come from and the supply chains that they've had to come through. There's a buyer somewhere in the world working for some company that had to decide where to source it from, who to buy it from, how to get it packaged, how to even get it out of the field and on a truck, and somehow to get to our stomachs. There's a lot of complexity in that. You add in the food regulations and the safety and trying to keep everything of high quality. This creates a lot of excitement and opportunity, but also a lot of complexity in the supply chain.
That brings us to our simple value proposition. It's really that buyers and sellers throughout the food industry come to us because they're overwhelmed at a complex supply chain. We work with our people to help them reduce complexity in their supply chains. More of our people will offer them a new supply chain. By partnering with us, they're able to then focus on their business and their customers, and we manage their supply chain behind the scenes for them. I'll let you familiarize yourself with the slide for a moment here. The dots on the slide represent our sales and supply activity into and out of those regions.
You can see there's larger circles in North America where some of our core business is, and some emerging areas in South America, Europe, and Asia, where you see both sales and supply activities occurring there. In order to move that supply around the world, our logistics experts are moving over 2,000 shipments between surface-based ocean and air freight every day. They're working with suppliers and receivers to try to figure out how to optimize the shelf life on that product. By having strong relationships with people, we ship over 100 million pounds in a week of fresh produce from over 35 different countries. A large portion of that is in our 12 strategic categories. Over the years, we've simplified the mix of business that we've sold to our customers.
When you go to lunch, you will see a display of our 12 categories in the other room. After you check that out, I am sure you will agree we have great products. You already know that we have great logistics. I would tell you what really sets us apart is how we bundle that together. When you mix our great logistics programs, and you bundle it all with our value-added service. It is key because the bundling is what ends up increasing our value and our revenue per transaction. Let me talk a little bit about how the bundling translates into results. We finished 2016 with total revenues of $2.3 billion. Products and services business made up about 60% of that, and the remaining 40% came from our transportation services. Like the rest of the company, we have a high return, asset-free model.
The 2016 net revenues were $235 million, and we contributed another $76 million of operating income. Over time, as we continue to see this fresh demand and this complexity in the supply chain increase, people are looking for solutions for that. We do anticipate that the transportation and services aspect will most likely outpace our product group. We have been generating these kind of results, strong results, for a number of years. Historically, with the way we have reported, it has been a little bit difficult to see this complete picture for our segment. Now with the Robinson Fresh segment reporting, it opens up the opportunity for everybody to see the full value that we contribute.
We are really proud of the returns, and I am proud of our unique model that our over 900 employees within our division provide to the large global brand names that we work with every day. They push us to be innovative, they push us to be leaders in our industry. Oftentimes when we are innovating, that creates a path for a number of areas within C. H. Robinson to take advantage of. I would also tell you that as they push us to be innovative, as we grow and invest inside our plans, we are going to continue to optimize and put up the strong operating margins to preserve those as you see today. A little bit about the industry we work in. The fresh food industry is composed of retailers, producers, wholesalers, food service organizations, restaurants. At 63% of the mix, it is our largest revenue segment.
Companies across the world from the global grocery industry represent about $8 trillion of total sales. That whole industry, while their same-store sales are fairly flat, the fresh food contribution in those store sales are up to the tune of 40% of the business within those stores is now fresh compared to 10 years ago, where it was 20%. We are riding this wave of continued fresh growth. There is also some things like mergers and acquisitions over the last five years. There has been 11 of them with the top 75 retailers. This causes some stress for the buyers, the buyers decide they want to hand off more business to some of the large global vendors and theirs to help them manage some of those global supply chains. We have been involved in some of those.
Today, even though we have relationships with 24 out of the top 75 global retailers, it's less than 1%. A lot of market share yet to be gained in that global opportunity. Our second largest customer segment is food service. In the U.S., it's approaching a $1 trillion industry. Not sure everybody knew this, but in 2015, the food service industry actually surpassed the grocery industry in total sales. We're all a part of that with eating on the road often, and there's continued growth anticipated in the future there. Our relationships in this food service industry tell us they need a number of things in their supply chain. They need more item-level visibility. They need more functionality from an inventory and replenishment perspective. They need some consolidation and they need contract management and other aspects like that with their distributors.
That's perfect for us because our Managed Procurement Service or MPS, we call it, does just that. MPS utilizes our Navisphere technology platform on behalf of our customers, managing over $1 billion of business—sorry, $1 billion total services, $0.5 billion services through MPS for the restaurant industry. MPS is our fastest-growing service within Robinson Fresh today, and it's really laden with very fast supply chains. This is in minutes and hours versus the days that some other supply chains run. We're very excited about the continued growth there. What's going to allow us to succeed with these opportunities? John pointed out earlier that there's a lot of innovation going on in the different segments. We've got different competitive landscape going on, and that's especially true for Robinson Fresh.
For us, when we look at any one service or activity across our value proposition, we've got a competitor, whether it's a large grower or a carrier or what have you, and that's naturally across our service or our supply chain. When you put together that value proposition and put it into action with multiple years of fresh expertise, global fresh logistics, and bundle that together with our platform, that's where we find nobody else that can compete in that global arena. That's really our value. We've always been known as a produce company, and that business will continue to grow, and it's going to continue to be profitable. Our vision does push us to aspire to do more and to grow our global market share. As we look out into that future, we'll be focused in really four fronts, maybe.
First of all, leveraging our temp control expertise to become a global leader in fresh logistics. Also, as we expand each of our 12 strategic categories, we don't want to just satisfy that fresh demand. We want to be able to lead and offer choices that our competitors can't source and deliver the products that we do. Expanding our services globally is paramount to achieving more market share with those top retailers that I mentioned. As we expand our market share, that adds value not only back to us, but also to the suppliers that are moving their products. Continuing to commit to a world-class sales and account management organization. This will allow us to be the destination of choice for top talent in the industry and help secure our future and ensure our sales plans. I talked to you about Robinson Fresh and our business.
I went over the new reporting, our strong performance, and the way that we're going to continue to measure that going forward. I talked about our expansion plans from domestic or core of North America to global and the strategy for ensuring that performance. I hope that you have a stronger confidence in what we're contributing now to the rest of the organization, and we intend to contribute and expand into the future. With that, questions now?
Andy, would you have a question?
Yes, from Citi. We're going to talk a little bit about the transportation piece of the business and some of the words that were used. Fresh as a business, I think you're around 12%, 13% versus a 13 percentage of the other transportation business in North America, at least. Can you think about how that dynamic plays out over the course of the next couple of years as increased competition and sort of opportunity to potentially grow that? Then maybe think about the global growth initiatives and how much you think acquisitions contribute to that growth category.
Yeah. A couple of questions there. I would start out by saying that our business, as you have all been aware of our activity from a truckload perspective, truckloads, I guess, service within our transportation area. We have a number of similar, but a number of different competitors in our truckload business. Really for the ocean and air business also, because we focus primarily on temp control activity. I mentioned earlier about the rising and continued growth of consumer fresh demand. That creates complexity for a lot of people, and it requires us to have a little bit more expertise in managing those cold chains. There's a lot fewer competitors in that space, and we look for continued growth. I'm sorry, the second part of that question about acquisitions, I think it was.
Just thinking about sort of the global expansion that you're looking to do, acquisitions within that category.
Much like Andy and a few others had described earlier, the pipeline is full of opportunities, and we continue to evaluate. We certainly want to build out our structure and our foundation for being able to provide the services that we do in North America. We continually are looking at all areas, Europe, South America, Asia, all of them are on the table, and that's where we're going to continue to I've mentioned the top retailers. They need global providers that have their touch points around the world, and it's really important that we have not only capabilities and expertise by country, but also the people have that knowledge of the local marketplace. Our expectations are that we're going to continue to expand those capabilities.
Thank you. One more question. That's a challenge for you in two minutes.
Sure. Different than fresh on that, John Mark from Street Level. Over the last five years, there's been a drought in California, and the regulatory environment, if anything, has become more onerous in California. As a result, a lot of produce has shifted to other places, Mexico in particular. How have you dealt with that? Has that been a net plus or a net negative in that business?
Whether it's a net negative or plus, I think what we've been doing is strategically looking at where we need to find more supply in order to facilitate or, I should say, supplement declining supply that was occurring during the drought. In our watermelon business, for example, we ship from Mexico, East Coast, West Coast of the U.S., and some areas in Central and South America. We were kind of already ahead of that diversification before that supply ended up having some decline. We ended up losing some supply with some growers here and there, but we had already added in some other growers in different parts of the country. I didn't see as big of an impact.
Now, this last six months or so, there's been an El Niño, and the lakes are all full again, we're back in the cyclical environment of that resilience. I don't see that it hurt us enormously, but we certainly have been looking at it.
We have Jordan Kass, our President of Managed Services.
Everyone, my name is Jordan Cass. I'm the President of our Managed Services division. I've been with C. H. Robinson since 1999. Some of you may recall the American Backhauler acquisition came to C. H. Robinson via that acquisition. My focus at C. H. Robinson since 1999 has entirely been on creating and growing the TMS portion of the Managed Services division, the largest component of Managed Services. With that in mind, I feel like I'm in a really good position to tell you the story of Managed Services and answer any questions that you have. Today, I thought I could focus on three things. I wanted to begin initially with the story of how we began within C. H. Robinson, I know it's a look back, but I think it's useful to cover the history.
I think it's a good way of illuminating what it is that we do for our customers. I think it also is really helpful in painting a picture of an innovation that was created inside the framework of C. H. Robinson. After we talk about the history, I want to take a look forward. I want to go towards the future, and I want to talk about some mega trends that are really driving growth and interest in our business, and that are also having a profound impact in our product roadmap for our technology platform, Navisphere. Lastly, I'm going to wrap up with a discussion on a newer initiative we're bringing to market. If that sounds good to you guys, I'll jump in, and we'll start with the history.
As I mentioned earlier, our business began in 1999. I think all of you here in the room looking around, you likely remember that that was the peak of the dot com boom. Everybody was trying to figure out how to capitalize on the internet. In our little corner of the world in logistics and supply chain, nobody had quite cracked the code. We set out on a journey to figure out how to bring that technology into the marketplace. As we did that, our approach was to go out there and collaborate with our customers and tech shippers about how they were managing their logistics. What the slide behind me is showing, that what we found was that there were these two really polarizing approaches to logistics management and even supply chain management.
On one side of the equation, we went and we talked to companies. They said, "Hey, above everything else, we want to insource. We want to retain control of carrier selection and carrier management. That's important to us because we want to own the customer experience." At that time, though, they also said, "Even with that retention in carrier selection and carrier management, we find that we don't always have the talent we need to drive our logistics forward." The other thing that they told us at that time was if they did make an investment in technology, the issue that they had, some of you may recall this at that time, was that there was a high capital investment and a long time to implement. It was really hard for these guys to generate a return on investment on technology platforms.
On the other side of the spectrum, we went and we talked to shippers that we have the opposite strategy, right? We're not going to insource, we're going to outsource. We are going to do that with a traditional third party logistics provider. As we talked to those shippers, what we heard from them typically was, I wouldn't say typically, but a portion of them would say, "Hey, we still want to retain control of carrier selection and carrier management. We're not interested in actually turning that over." They wanted transparency in the underlying rates. They wanted transparency in the underlying carriers. Having said that, they loved the talent that the 3PL brought to the table. They liked the fact that the 3PL was responsible for the technology strategy. We took both learnings back to C. H. Robinson.
Robinson, what we really said was, "Hey, there's a gap in the market." There is not anyone who has brought a technology platform forward to the shipper that allows them to directly connect to their core carriers digitally while still retaining control of carrier selection and carrier management, then giving them the talent to make the most of the software platform. We were the first to introduce that to the marketplace in 1999. Yes, as we began as a startup within Robinson, today, I am pleased to announce we are no longer a startup. Last year, we managed $3 billion on behalf of our customers. The platform is global, we did that in 170 countries. We did it across all modes of transportation, and we managed more than 10 million technology transactions or TMS transactions.
That is a little bit about who we are today. Now I'm going to switch gears, and I'm going to point us to the future. I want to cover three mega trends that are really driving the growth and the interest in the business. Again, as I mentioned, they're really shaping the technology roadmap. The first trend that I want to talk about is globalization. If I go to a major shipper and I say, "What is your growth strategy?" To a T, almost all of them will tell me, "Hey, we're going to grow with populations, right?" It's this idea that there's 7 billion people on the planet today. There'll be 9 billion by the year 2040. That population growth, it's not here, right? It's going to be in emerging markets, places like India, China, the Middle East, and Latin America.
Very few of these shippers have the infrastructure, people, process, and technology to enter these markets. They're turning to us to provide them with the capability. The trend that I want to talk to you about has to do with talent. I think many of you here know that there's a talent shortage in supply chain. You've likely heard that, and there's a lot of statistics out there on that topic. I'm just going to cite one today because I think it does a really nice job of summarizing it. That is, if you're a shipper out there in the world and you're looking to hire a supply chain professional today, for every six supply chain jobs, there's actually only one trained supply chain professional. That is very important to our core strategy.
If you go back to our history, I mentioned that our customers were very focused on the gap in technology, but they also highlighted that they still needed talent to drive their core processes forward. Our decision to not just focus on technology, but to also bring talent in unique ways, that has driven significant growth and significant differentiation to our model. Because when we compete against software companies, we can differentiate with talent. All right. The last trend that I want to cover is something that we call multi-channel logistics. If you take nothing else away from this trend, it's the idea that the argument we would make is that supply chains have fundamentally changed.
When we started the business in 1999, if I went to a shipper, if I went to a professor, if I went to a supply chain practitioner and said, "Hey, draw me a picture of your supply chain," this is the picture they'd make. If you notice, it's super linear, right? Supplier, manufacturer, distribution center, customer. The argument that we would make is that this picture is completely outdated and that today's supply chain, firstly, as we've discussed, is global. Secondly, it's something that we call multi-channel. I'm just going to take a minute to walk you through the complexity of this slide. Today's shippers, they don't go distribution center, customer. They're distribution center, consumer, right? What they're going to do is they're going to bypass their DC, and they're going to go straight to your home. At the same time, they're going to have another channel.
They're going to need to bypass the DC, and this time they're going to go to a retailer. They'll also still have traditional channels in place. Our customer still will use a distribution center and go to a customer, but they likely now have e-fulfillment centers. There's probably a cross-dock. There's probably a 3PL network as well. Because, as we've discussed, supply chains are global, they're probably using our customer's transition point at the free-port trade zone. The implication is that if a supply chain is multi-channel, it then needs to be able to leverage every mode of transportation to service their customers. Today's shipper is now using LTL, intermodal, truckload, air, ocean, small parcel. The complex picture behind me, that is truly what today's supply chain looks like.
The implication is that supply chain visibility and live stream control in this environment, it is a much bigger challenge than it ever was before. Therefore, our platform, Navisphere, which is one of the world's only truly global platforms, right? It services all regions. It services all modes of transportation. That is driving significant growth and significant interest in the Managed Services business. Recall that customer symptom, right? They're still looking for talent to operate the technology because of the supply chain gap in talent. Our decision to not only offer them technology platforms, but to pair it with our control tower networks that sits on top of the modern-day supply chain, that is driving significant growth, that is driving significant interest in our business. Okay, moving us on. This is the last topic. I want to wrap up with innovation.
As I talk about innovation, I want to spend a little bit of time initially talking about our customers. When you look at TMS's business, our customers, we've always focused up market. We've always focused on the biggest shippers in the world. Our customers are companies like Microsoft, like Ocean Spray, and like Delphi. Having said that, we've always felt that if we would've gone down market, right, to the small or mid-size shipper, that's a market that is entirely underserved. There are not a lot of technology platforms that are out there that are focused on connecting that size shipper to their carrier base. Therefore, we're pleased to announce that we have brought Freightview to market. Freightview is our platform for the small and mid-sized shipper. Freightview is innovative for many reasons, and Megan Orth is with us today, who's the director of Freightview.
She's going to give you a peek at that technology live later on. What I would submit for now is that what is really interesting and innovative about Freightview is that a shipper can get online, they can swipe their credit card, within under 24 hours, they can set up their own technology platform, and begin shipping directly and digitally. Okay, that's it for me, guys. At least before Q&A, I want to remind you that we talked about three things today. We spent some time talking about our history and this innovation that was created within the framework of C.H. Robinson . We talked about the mega trends that have shaped our strategy, our product roadmap, and our response to that is really driving the growth and the interest in Managed Services. We wrapped up with a discussion into our newest innovation. Thanks again.
You guys have been a wonderful audience. I'll yield to questions.
[Chris O'Harold with Good Process Management]. Can you explain the pricing of this? I mean, you're selling software. Where does the actual logistics network sit that we pay for?
Certainly, if we were working with a shipper and they just wanted to buy or purchase a self-service module and use our technology, they could. The overwhelming majority of them are buying the technology platform, and they've paired with a dedicated team of people and operating that technology as an extension of their staff. They're retaining control of carrier selection as the customer. They're retaining control of carrier management and then we're just executing against their plans. The business model is such is that we are essentially a subscription, and the shipper can choose. Most of them choose a fee per transaction, like the variable cost. Others want something that's a little bit more fixed that they might commit to do. Harrison, I think we have time for both.
Just a question on Freightview. As I remember, back to some conversations with Tim Barton before Freightquote was acquired, they were developing Freightview, but I don't think they had launched it. What did you have to add to that system before you felt it was ready to be launched? How has the customer reception been so far?
We didn't have to add too much to the platform. I think they had a really great vision for it, and Megan will talk to you about that vision and the product roadmap later today. I think Megan's team has really just been proliferating that vision. If you likely recall, what they were doing was taking APIs. They were the first to really directly connect it to the carrier community. I think most of the tweaks, frankly, from my perspective, was around the go-to-market strategy and how to really drive carrier satisfaction for the platform, how to monetize the platform, and the TMC experience and what we did with that is very akin to what we're doing with.
Hey, Jordan, a couple of questions. It almost sounds like you guys are moving to a SaaS-like model. If that is the case, can you just help frame what that looks like in terms of growth and margins? I know you guys put up the earlier growth slide, roughly 10% CAGR or something, to what you can potentially do. Just talk about the financial impact of that. Second, and warn me here because I'm going to make this super simplistic, how hard is this to do? Because when we talk to a lot of these startups in the space, they say they have TMS systems as well, and they have tech teams as well. What's the secret sauce that differentiates your offering from some of the other ones throughout there?
Sure. I think in many ways you answered your own question, and what I'll do is try to connect the dots for it. I'll go back and say we could have done technology -less. Certainly, there are customers who break us from Harrison, just use it as technology only, as SaaS. The overwhelming majority, particularly, think about my customers. The biggest one is not only is there a shortage of supply chain talent, they're under so much pressure to do way more work with way less resources. They can't hire. Our ability to bring dedicated experts has really created the differentiation and the expertise with SaaS. I also think this technology is unbelievably important. We're going to continue to invest in it. This world is changing so much faster, and we're going to be on top of it.
Having said that, the differentiation point over time, you know this from SaaS. At some point in time, someone breaks out, they innovate. Then the rest of the tech players catch up. Then it commoditizes. You start to deal with the margins and all of that kind of stuff. We want to differentiate on expertise first. What our customers are really looking for is end-to-end supply chain optimization, and that takes real supply chain expertise. It's the pairing of technology with the expertise that creates the differentiation. It's not just going to be a SaaS solution.
If I could-
I have to bring the outro music in with me with Jordan. Thank you. Thanks, everybody. Introduce Jeroen Eijsink, our leader, President of Europe, service and transportation.
Thank you, Tim. Thanks to these gentlemen for giving me the opportunity to give a 15 minutes introduction to our activities in Europe. I joined C. H. Robinson 20 months ago. Before that, I spent 13 years in service plans in DHL, where I was the last 10 years managing director in various countries, including the U.K., Ireland, Belgium, Netherlands, and Germany. I had quite an exposure to the European market, I would say. I'm quite excited that I had the opportunity to join C. H. Robinson because I believe that the brokerage model, combined with the basis of people, process, and technology, provides a great opportunity exactly now in the European market. My purpose today is in the next 40 minutes to share that insight and belief with you. I'm going to show you our footprint in Europe.
I'm going to size up the market opportunity a little bit. I'm going to spend quite some time on the competitive environment and explain why I believe C. H. Robinson is in a good spot there, to close off with what our strategy and plans are for the future to capture that opportunity. Good for me? If you look at our network, we are in European Surface Transportation currently present in 13 countries with 22 offices. Half of our employees across Europe, which are about 564, are actually active in European Surface Transportation. We're in Europe already since 1993, our network currently is based upon major acquisitions we did in 1999 with Norminter in France and Spain, and Apreo in Poland. We are headquartered in Amsterdam.
There's two things I would like to call out on this slide beyond the bullet points that you see on the left. First thing is, we've got a pretty lean setup of our activities in Europe. Our offices really consist only of sales, customer service, account management, carrier management, no back office functions whatsoever. All of them have been centralized through shared service centers, which the main one is being in South Poland. That gives us flexibility to scale up our activities. That gives us a cost advantage into the market. The shared service activity we actually share across all four divisions in Europe. That means that we're really lean and mean for growth in that sense. That, I believe, gives us a competitive advantage to some of our peers who do not have that capability, particularly based on the technology that we have.
The second point I want to call out is, there's always a discussion about how many offices do you actually need in a market like Europe. What I can say is we are not going to have a proportional office network in Europe like we have in North America, because I believe with technology advancement, you do not necessarily have to cover every single region in Europe. However, due to the cultural difference, it is important that we have proximity to our major carrier base, predominantly in Eastern Europe, as well as to our customer base that is all across Europe. We will continue to consider going into geographies where we do not have a direct footprint in order to get that proximity to carriers and customers. It will not be in the hundreds of offices.
If we go down to the market, the size of the market opportunity, I'm going to give you four pieces of information. You have to be aware that the European data on the transportation market is not always as transparent as it may be here in Europe. Sorry, maybe here in North America. These pieces, you have to get the gist beneath single one of them. First of all, the pie chart shows on the inner circle the market, on the outer circle, our C. H. Robinson position, and it becomes pretty much clear that we are absolutely focused on truckload brokerage. We do not, at the current scale we have, want to be distracted by too many other services such as LTL or intermodal. We stick to the full truckload brokerage because we believe we can scale up in that service quite fast.
On the right-hand side of the chart, you see the size of the market, which is estimated. The 3PL market is estimated around EUR 340 billion, of which roughly two-thirds to 70% are domestic, so in our country, and one-third is roughly cross-border. Cross-border is outpacing the growth of the domestic markets in Europe by roughly double the speed. We are focused on cross-border traffic because we prefer long-distance transactions. Our average mileage per transaction is 600 miles. That gives, if you know the geography of Europe, pretty much lets you cross borders immediately. Therefore, that is where we believe our sweet spot is. Growing faster, that average length of haul will come down because you obviously have to grow also in shorter hauls, but we will still try and stick within that longer haul perspective. That is our sweet spot of the market.
If we move on then to the next chart. On the left-hand side, that is the truckload market, including intermodal, so it's not exactly like for like to the previous chart. It's the 3PL truckload market, including intermodal, and it shows the level of fragmentation that we have in Europe, which is probably very similar to the fragmentation that you see in North America. What you can also see if you go through the top 10 names on this list, who have less than 30% of the market share, you don't see typical brokerage companies in there. Most of them are actually integrated service providers. I will come back to that, why that is an important notion to understand our opportunity as a broker into that market. On the right-hand side, you see a geographical scope. Again, on the inner circle, you see the markets.
On the outside circle, you see our position in there. It's a bit difficult to read because of the color scheme, but if you take the top five markets that we are active in, which in our case is Poland, France, Spain, U.K., and the Netherlands, which are our top five. They generate about 83% of our net revenue in those markets, but it's only 43% of the total market. That gives us quite a sizable opportunity to grow. The most notable opportunity is obviously the German market, which is the largest in Europe. Why do I feel that we have a great opportunity at C. H. Robinson in the competitive landscape and at this moment in time in the European market? I mentioned the integrated service providers earlier.
If you may see the history of the transportation market in Europe, that obviously we had two levels of deregulation in a way. We have deregulation within single country markets, then we obviously have the creation of the European Union to create one single market on top of that. That two-speed approach led to the fact that a lot of our competitors have actually grown within country borders. Therefore, in order to get scale, they scaled up by adding services, not necessarily by scaling up within the single service. A lot of the large players actually came with a one-stop shop approach to try to grow that within country markets. When the European market became more and more prevalent, they obviously scaled that multi-service model into other markets through acquisitions. That created quite a service breadth and level of complexity to deal with.
At the same token, our customers are using the growth of the European market to create scale, and therefore being able to buy best-of-breed instead of having to buy one-stop shop. That opens an opportunity for a best-of-breed player and truckload brokerage that we are to move into that market. The second main notion I want to give you is that the European mentality has been traditional in the sense that we love to work with asset-heavy carriers in the past, and that is only shortly over the last sort of 10, 15 years has opened up to a more subcontracted model. There is still a high gearing towards assets in that sense. The brokerage model was a difficult model to sell, let's say, 30 years ago. It is increasingly easier to sell these days.
Actually, the new entrants in the market on the technology side are doing us a favor because suddenly, and I hear it today as well, they basically create a market space in Europe by making it en vogue to basically have a supply technology-driven model. The third notion I want to give you on that slide is that there are brokers in Europe. Many of those brokers actually grew to help the asset-heavy carriers to deal with their empty mileage, and their customers are forwarders. They broker between forwarders and carriers. They don't broker between shippers and carriers. Now that there is maybe a need for brokering between shippers and carriers, they struggle because if they do, they cannibalize their own business by bypassing forwarders.
In that sense, we feel from the left-hand side of the traditional competitors, we have a pretty good solid competitive position. On the right-hand side, these new technology providers basically help us, or technology-based providers help us to create a market segment because we've got that technology ourselves, but we also have the forwarding capabilities to move the freight, not just to match it. I feel that in that sense, we are in a sweet spot now in the market where we can position ourselves. That is being recognized, so there are competitors also with North American experience now considering entering the market. On a day-to-day basis, this is the scope where we deal with.
With the scale that we've created over the last 20 years and the technology base that we've got, I'm pretty excited to be part of this team and leverage this opportunity. How are we going to do that? That's my final slide. I think we have, as I said earlier, a very solid base to build upon. We've got this one system which was mentioned multiple times today. In the European market, where our competitors tend to grow through acquisitions across multiple services, that is almost a uniqueness to a certain extent. That is a competitive advantage. It helps us to be able to first outsource our back office and shared services. It helps us to have high transparency. It helps us to create data to be smarter in pricing.
Having that technology is, in my belief, in the European market, an even bigger competitive advantage as it is already in North America. We have great talent in our team. It's a relatively young team, and we recruit them from universities and polytechnics like we do here, and focus a lot on attitude and analytical skills, and then we train them into the logistics industry, and that is a different approach than many of our peers and competitors in Europe so far. What I also want to point out as an important part of our baseline is that we actually are a true broker with a buy-side and a sell-side, which again, versus traditional competitors in Europe, that is not necessarily the case. Even if others would adapt that technology, splitting between a buy and sell side is still a challenge to go after.
That means that on this baseline, we focus a lot on creating organic growth, speeding up that growth, leveraging this opportunity. I think the crucial point that I want to point out is focus. In order to scale up fast, we have to be extremely focused in the market. That means we got to focus on cross-border truckloads, as I mentioned. We want to have the highest possible interchangeability of equipment. It means standardized equipment, so we have access to the largest pool of carriers possible. That also means that we automatically have to focus on certain industries where we are really strong at, which are utilizing this piece of equipment, which is normally industries with high volume, relatively low value of cargo. Then we focus on corridors, and we grow along adding corridors between regions in Europe bit by bit after bit.
After we create scale in several corridors, it gives a service, it reduces the empty mileage, and that obviously gives us the opportunity to leverage our buying power. We keep growing. It's a very sharp focus strategy that we're following. Once we've created scale, we will start to leverage into other services. That brings us to the last building block at the top. We will, once we've created more and more scale, start venturing into other services such as LTL and intermodal, but that is not our priority today. We obviously want to leverage the technology creation that particularly in this building and within the North American framework is available to us and that we can leverage and use. We're obviously working on expanding our footprint, as I mentioned on my first slide.
In that focus, we will both consider opening new offices as well as considering M&A activities as we see fit. On the opening of offices, we at the moment focus very much on Eastern Europe, where we see a faster growth than the average of the EU27 countries. We also see a high adaptability of the brokerage model that we have, and there's relatively low investment risk. That is where we focus. In the last 12 months, we opened offices in Bratislava, in Slovakia, near Czech, and just recently in Bucharest, Romania. There we will continue to focus that way. In the more mature markets, we already have a presence, or we will look more closer if we find broker models that would fit our business model to consider acquisitions.
Those are not hundreds on the market, but there are certainly a few, and we are tracking. That is our strategy, and I feel really excited about being able to lead our team into this opportunity. I think with this model, we're at the right moment in the right place to do that. With that, I hope I could do a little bit of justice to the European opportunity.
Then we'll open it up for a couple questions. I guess we'll first, and we'll go to Tom next.
When everybody's ready. I will give everyone a chance maybe to understand the market and maybe what you're looking for, how to highlight the top 10 players. Obviously a lot of them are asset-based providers here in North America. As I've gone into Europe and thought about an asset approach as opposed to an asset-light approach, what's changing about the market that suggests this opportunity for you? I think as I look over the past couple years, European truckload has been a focus or a strategic focus for the company for a while. What sort of dynamics are you seeing now that means a better opportunity or likelihood of success?
I think markets are obviously defined by consumer behavior or by customer behavior. I feel that the willingness to work with asset-free providers who do not have trucks in the garage to fill and say, "Your cargo is your here in truck." I think that has changed over time. The market context in which we operate is more favorable at this point in time, I believe. Certainly this whole discussion about these new technology entrants helps that discussion. I think that is one notion. The second notion is that we in the European market, there is very much a contract notion on the customer side. Secure contracts, secure capacity over 12 months' time. Fluctuations in demands are now putting pressure on those contracts.
We see now suddenly tenders that are annual tenders, you get mini quarter four tenders on top of it. The cost to manage those peaks. You can see changes in behavior in that sense, and that opens the door to a brokerage model where we can actually follow the line. On the buy side is although capacity constraints we do have occasionally, we still have a quite a large reservoir of carriers on the Eastern European side, low interest rates, ability to buy trucks. Low barriers of entry. We have a very broad carrier base. For a company of our size, we have 13,000 carriers in our database, that is for a company of our size, quite a lot. We tend to keep that carrier base as broad as possible.
Those two things, demand change and the carrier side will obviously represent opportunity.
One last question here. I think you described some of the market changes. What about the changes in C. H. Robinson's approach? It does seem that maybe a little bit over the years past, there's been this Europe opportunity for Robinson. The idea that that means obviously it could just be a lot bigger in general. Is there a change in the company's approach to the next five years compared to maybe what you saw 10 years ago?
Well, that's a bit hard for me to comment, I suppose. I mean, you always have to see the context in which you can take decisions, and I just tried to describe the context that we currently have today that I perceive to be very favorable with where we want to go. I think if you want to take away one notion to be complete to answer your question, it's a very sharp focus on where we want to grow, be very disciplined in executing according to that. I feel that when this opportunity is there, you need to know exactly where you want to grow and how you want to grow. Yes, we want to open offices like in the past, we're very careful to see where we do it and where we don't.
We want to grow fast, we want to capture a lot of customer opportunities, we're not taking any opportunity. Very selective on type of opportunity. If at all, I would say, I think we're sharpening our focus, that sharpening that focus is maybe that discipline we're putting those types of cultures. We'll see in the segment of letters you'll get CS from us.
Okay. Thank you, Jeroen. Just before we transition to lunch here, I'm just going to provide a couple of details for the next 45 minutes before we return. First, as mentioned earlier, lunch is right next door. There's two sides to the table, enter on both sides and the seating is right in that room. We have 45 minutes, from noon to 12:45, you're on your own time, if you will. Beyond the lunch area, the area where you came in and right in this proximity here that I'm pointing to is available to you. We have a theater, we have an innovation center. There's coffee and drinks. You can mingle in that area if you're not in the seat.
I know most people will be most of the time in there are some areas to pull up your laptop and scoot to and make a call. The next 45 minutes is yours. Use it as you will, those are kind of the areas you know where the restrooms are. We will kick off with technology right after lunch with a familiar face, Mr. Lindblom, will kick us off after lunch, we'll be starting right at 12:45. Thank you.
This is an audio test. Test one, two, three. Test one, two, three. Testing one, two, three. Test one, two, three. We're performing an audio test. Check one, two, three. Check one, two, three. Testing one, two, three.
Hey. Can you take it back home? Can we use your mic? We need somebody with a mic.
What is?
You'll get it back for the Q&A.
Oh, you're through.
I have my
Are you through?
No, I'm picking up.
All right, here we go.
I owe you.
Before we start the webcast and set it up, we just have.
Thank you.
When you're asking questions, just hold them a little bit closer to your mouth when you speak.
Yeah.
A little bit better. Our mics are up as well, so to the best of your ability to consider that sounds great. With that, we'll get started officially. Whenever you're ready here. Just whenever you need. We good to go? All right. As mentioned, we're going to kick off with technology. I'll turn it over to Mr. Lindblom, who many of you know from years past, and Chad leads our technology. Without further ado, we're going to jump right into technology for the next 45 minutes. One thing I will mention, once we get into the demonstrations, we are going to allow questions, although I'm hopeful that we can coordinate it well and stay on track with our time. Our experience is it works better to be a little bit more interactive with that. When you have a question, just put your hand up.
We still have to get you a mic for the folks on the webcast. We'll handle the demonstration questions in that way. To you, Chad.
Okay. Thank you. Thanks, everybody, for coming. It's great to see some familiar faces after a couple of years away, I guess. For those of you who don't know me, I'm Chad Lindblom. I've been at C.H. Robinson since June of 1990. I was in the finance area, became the CFO in 1999, was the CFO until about two years ago. At that time, I moved over to technology. Technology, like you've heard today, is a very important part of our business. A couple of years ago, I thought it was a great challenge for me, and it was a good opportunity for the company for me to leverage my knowledge of the business and help the IT department build what needs to be built.
Right after lunch, I thought it'd be a great thing to do is to go through about 45 minutes of slides on our architecture. Both the software architecture and the infrastructure. Andy didn't like that idea. He forced me to bring in some very talented people to help me demonstrate the technology. Today, I'm just going to give you a recap, mainly of what you have already heard today about Navisphere and our platform. Navisphere, it is a global, all-mode platform to execute transportation. It has all of the required things to do that, things like real-time visibility, real-time analytics, order management, optimization, carrier selection, inventory management, and things like that. The technology has been around forever. C.H. Robinson has been a platform company since its inception. We've always been matching supply and demand in clearing transactions.
We were one of the first in the industry and early adopters of technology. We connected all of our local offices in the early 1980s through a mainframe technology. In the early 1990s, we began communicating through EDI with our customers and accepting orders and invoicing customers. Again, we were early adopters of electronic communications. In the late 1990s, we went to the web like everybody else and started exchanging information that way as well. In 2011, we were the first Navisphere mobile carrier app in the industry. That Navisphere mobile carrier app just got retired last year when it was the most used app in the industry, brokerage transaction. When we retired that, it was when we released our new app, which is also the most used Navisphere mobile carrier app. Bob talked about that earlier. Our platform has become more and more automated over time.
Today, we have 35 million different messages that are digital per month. Over 70% of our customer orders are tendered to us electronically, and over 45% of our transactions today are no touch from the perspective of the order is tendered to us, the carrier is selected, shipment is rated, and it is tendered to the carrier today. We do have a very powerful and robust platform, as I mentioned. Really what makes it work and what makes it so important is the 220,000 different trading partners that are connected. Those relationships are made possible by our strong people. Some of the current areas of focus within our technology. There's global connectivity. We've all been talking about that all day. We talked about the API and EDI, machine-to-machine integration, and how important that is in the industry.
For small, medium-sized customers, it's web and mobile. Still, for a significant portion of our customers and our carrier base, it is traditional manual phone data entry work. Again, we want to get rid of as much of that type of interaction as we can and move those customers from manual to mobile, to web The electronic integration, we feel it's very important to be good at all of them to be able to interact with the full supply chain. We consume a lot of data while we're doing this. Bob talked about the importance of not just the shipments we move, but the shipments that we didn't move and the shipments we didn't use. We also integrate a lot of information from outside of our network. The things like rate indexes that are available, weather information, traffic information.
That information that is available to everybody in the marketplace, we consume that as well. Our differentiator in our asymmetry and the data availability is the great amount of transactions we have ourselves. What do we do with all this data, and why is it important? We're using this data to do data science, machine learning, artificial intelligence to make better matches, make better pricing decisions, provide better visibility to our customers, and actually get to the predictive. We're making our humans that interact with our system and our supply chain more efficient by using this data. They've always used the data. We're now giving them better information to make better decisions by not just looking at the executed transactions, but all of the data that we have available now. Leveraging that data and those skills is creating more automation opportunities.
We've talked a lot today about automation, taking friction out of the supply chain, how many no-touch loads we have. Bob mentioned that Freightquote allowed us to go to small LTL customers and make no touch transactions. When you look back to the no touch transaction part of Robinson's system, it really started in 1999 in two different areas, Jordan's business, the TMC, as well as LTL with larger customers where we are integrated with the customers on the load tendering and invoicing and also leveraging the automated interfaces we have with the carriers. In summary, we're doing what we can to reduce the friction in the Robinson brokerage model. We're leveraging our data asset. We are using machine learning to make better, more informed decisions, whether those are fully automatic or executed by our people.
We are using the data that we ingest to give better supply chain visibility to our customers and our carriers. We're also working on predictive analytics to help manage and predict disruptions in our customers' supply chains. That's it. I thought I should really just recap what everybody else has said about our technology, give you a recap of what we are currently focused on, now we'll move into a couple demos. Brent Nagy, who's our Vice President of Customer Strategy, and Brett Cooksey are going to demo a supply chain visibility product, and Megan from Freightview will demo her application that Jordan mentioned earlier. Brent, Brett, and I have been interfacing with some of our largest customers with this new product. We have one alpha customer up and running, and you will see a demonstration of their supply chain today.
We also have many other prospects in line to get onto this product as a beta customer.
Admittedly, a rookie to this room. The safe harbor statement is internally, the team that Chad has called out is referenced internally as Team Luminosity or Project Luminosity. If you see some of the branding within the actual application, or you hear us reference it, you should know that we have every intent to take this particular application and associate it to a master technology brand. That's my personal safe harbor statement from that side of the room. I got the driver. Okay, cool. Really quickly, what we thought we would do before we actually got into the tool is define for you how we see visibility. If you break this down into two segments, it's really traditional and maybe non-traditional, if you will. Traditional points of measure in a supply chain are pretty obvious.
What we're essentially doing in this space is building an application to aggregate all this information and at the same time, migrating away from legacy-based technologies, whether it be manual, some sort of web interface or API interface that's largely built around latent-based milestones and move it into an API real-time environment. Essentially, when we get into this tool, I want to make sure you understand that this entire universe of traditional supply chain measurements is being aggregated within the application. Really quickly, I want to call out, Chad talked about us progressively pursuing customers in Philadelphia and to continue to round out the application. I was at a large CPG shipper last week, and they are in the midst of going through an RFP for some of the competitors in the truckload space, specifically visibility, if you will. You probably all have heard of them.
I won't mention them. Having said that, the question I had for him is, "The second you turn this on, what are you then going to do with that flood of information?" He said, "I'm going to go to this other provider, and they're going to build me a tool to make sense of that information." I want to make sure that I'm making it clear out of the gate. We are building this as a holistic all modes in the traditional measurement forms, inclusive of inventory, as well as non-traditional flows in the form of weather, traffic, news, and economic impacts, with the intent of not only having one spot for all this information, but also then putting us in an environment from a machine learning standpoint, relative to intelligence and being predictive. It's very critical for us that you understand that our approach is holistic.
Additionally, we are not housing this particular application in one particular service. It is an enterprise product for deployment within the enterprise to be used across enterprise customers, in an attempt to really give them a single point of information relative to all their supply chain shipments. Again, we'll get into the demo here in a moment. One layer deeper than that are all these real-time visibility integrations. Over here, the simplistic way to work through this is on the left-hand side, you have emerging. Potentially on the bottom right-hand side, you have sunsetting. I talked about EDI, I talked about cell phone triangulation, dump phones, being able to physically take a phone number, associate it to a load, and then actually have that tracking through cell phone. Then obviously direct ERP integrations. Those will continue. That's the underlying master data from a shipper perspective.
Like I said, the emerging over here to the left. Currently within the tool, we have all air shipments globally ingested. We have all vessel shipments globally ingested in both through APIs. We have ELD aggregators and are aggressively pursuing ELD integrations, as well as global GPS providers. The global GPS provider is pretty critical when you think about some of the comments that Jeroen was talking about relative to Europe, because a lot of the technology from a track and trace perspective in Europe is centered around the actual GPS aggregation of the trailer. It's critical to understand the individual nuance on a continent-by-continent basis when you think about global visibility. Below that are traditional, and we heard a lot relative to what we're doing in the mobile application space.
Think about that as your phone and geolocation services and associating your phone to an order. Beyond that, ingesting potentially specific high concentrations of an individual carrier. If you're a large trucking firm or if you're in a large shipping frame, you have your own app, the ability to ingest that information associated to one of our customer's loads is also critical. With that, let's go to the demo. As he's bringing in, I want to highlight the customer that you're about to see. Our evolution from a visibility standpoint has been perpetual, and obviously technology is a large driver in what that looks like in the current form. When we headed down this path and got to a point of scale, it was important for us to really target a client that thought of this type of environment not only as aspirational, but impactful.
Essentially what you are seeing here today is Microsoft's entire global supply chain. Approximately 98% of their hardware moving throughout the world is represented here. Through the TMC, we manage and deploy across every single control tower resources associated to that network. A derivative of that through Navisphere is what you're seeing here in Luminosity. The other thing you should be aware of, and again, going back to all those ingestion points, is that we are no longer reliant on Navisphere as a single point of information to drive something. Brett and his enterprise architect team have built a whole host of, call it plumbing, around the tool that allows us to ingest information outside of Navisphere. Again, going back to news, weather, traffic, and more. To set up the tool from a landing page perspective, Brett, do you want to switch slides for me?
To set up the tool from the landing page perspective, essentially what you have here is the search bar, that's where I'll start. I'll start at the top and I'll work our way down. Essentially, what this allows you to do, is this allows you to, in a macro form, again, I want to start by saying this is a completely customer-driven. It allows us to, in a macro form, work through various different filters, if you will, or segments, if you will, and put yourself as a user. In the Microsoft world, they have a whole host of different user types. They have macro level users, of which you'll get to here at the end, they have micro level users relative to carrier relationships, geographic relationships, channel-based relationships.
When they're ingesting things or releasing things to market, they have SKU-based and launch-based relationships that are critically important. That type of interface with the tool is critical from a UX perspective, because essentially what you have to allow someone to do is to sift down into the things that they want, as opposed to have to look through everything to find the thing that they want. I should say this is probably where the question interaction part starts, right? Because I'm plowing through this because there's a shot clock back there. I don't know if anybody's seen this, but there's a lot of information here, so I'm just going to assume you can stop me if there's a question. In here you have risk level tracking summaries, what have you. You have various different regions, flows, carrier customizations, and obviously customer customizations.
For example, if they wanted to see how Walmart was performing for them from a delivery mechanism standpoint, anywhere in the world, they could sort on Walmart. They want it rolled up as a master unit number. From that unit number, they want to be able to siphon down in relative to the line of business, the product, or the SKU.
If you're an executive at Microsoft and you're responsible for Xbox, you can essentially interface with this tool for your entire global in-transit inventory, understand the performance of that inventory based off of your customer type, your product type, your SKU type, and then translate that back into risk, in-transit inventory values, and then eventually work into an environment where you are slowly reducing domiciled inventory because you have greater control over in-transit inventory and all the different things that relative to where we're going from a machine learning standpoint, from an AI perspective. If these electronic interfaces are going to be changing and rerouting and optimizing orders in a different way than planned, the underlying master data has to be completely sound.
I think that goes without saying, the point is, as a derivative of this technology and the fact that we've loaded this data into it, is it completely shines a light almost instantaneously where their master data is not accurate, where we're not getting what we want. They are aggressively pursuing their providers, their contract manufacturers, their warehouses, to really ensure that the appropriate amount of information, excuse me, the integrity of the information that is being passed at appropriate levels in this carrier. That gives you a sense from a filtering perspective, kind of how they would interact with the tool. Big questions there. Okay, moving along. This obviously is the world. Essentially what you're looking at right here very quickly are trade lanes, ocean-based shipments, again, color-coded based off of the actual ETA associated to that shipment, correlated to the requested arrival date.
You've probably heard, especially in e-commerce and in CPGs, the punitive measures that some of these big box retailers have. The punitive measure is not just when it is late, it is also when it is early. It is very critical in this entire environment that they understand relative to these various different retailers they are selling their products through, how their freight is performing, and it is not just when it is late. Again, vessels, you will see various different call-outs for facilities. These facilities are color-coded, based off of their particular desires. The purple are all their global reverse logistics environments, so return centers. All the blues here, the dark blue are all their forward deployed warehousing or DC sites, the traditional environment. And then these light blue pieces here and here, and then again over here in Asia, are their contract manufacturing centers. Lastly, you will see airplanes.
Full disclosure, it would be really cool if it were about 2 hours from now. Unfortunately, freight at this point, it is a certain time during the day from an import standpoint from Asia, has either landed or yet to take off. It is really cool when you can do a correlation and take the tail number from an in-transit plane, go to FlightAware, look the tail number up, and overlay that to the map to see it is exactly where that plane is at, both in our application and in theirs. If there is anybody that wanted to follow up and see that, hang out. I know some people are leaving early, but around 5:00 P.M., I would be honored to explain myself. Lastly, the continental aggregation.
We played with this early on, and visibility at a high, high granular or excuse me, at a high, high macro level, looks really sloppy if you are allowing a bunch of things to happen across the map. You have to aggregate it continentally and then allow for zoom-in technology that eventually breaks out in a grid-like fashion where all that freight is at. Again, all the color coding within those circles is associated back to stats. The number of shipments within that country. What you can then do is click down into the shipment. Again, when I say shipments, I am talking small parcels all the way up through container traffic coming off of boats or loaded onto boats. It has delivered once. Yeah. Okay. What Brett's doing here is to give you a sense on zooming in relative to a mode. Here we have truck.
You can see exactly where that truck is at. You can see that the line of business within that truck is Xbox One. This is one that has delivered, and it is delivered on time. Again, back to Chad's point, it is keeping and refreshing based off of current activity, not just near term looking forward, but what happened here recently, relative to performance. Beyond that, drilling down into the actual commodity view. Again, this is an example of being able to see a truckload of Xbox Ones, 500 GB, that were destined to their AC facility that just recently came online in Louisville, Kentucky.
Again, the point here is to show you how we are pulling information from their ERP, information from their various warehousing providers, correlating to in-transit information, and then deriving not only what is going to be the ETA associated to how that particular thing is moving through the life of the order, but then all the other underlying tech components that more or less build out that particular view.
I'm going to show you this.
What Brett's showing you is the actual facility drill down. You can see that within that facility, there are approximately 2,611 shipments. You can page through them. You can categorize them based off of late, on time, early, or at risk. Just going to come back out to the map view here. Drill down into a boat in the Suez Canal, I believe. Again, container activity. This particular one has two on board. You can see the various different items. There's two different containers. You can see the various different commodities that are within it. These are Xboxes destined for the country of Ireland. There's an Irish code based off of obviously probably outlets or games or what have you.
What's really interesting is that our relationship with Microsoft started with the ability for us to leverage Navisphere, when Xboxes and gaming consoles were deregulated into the country of China. From that, we have a pretty long history of enabling commerce for them relative to Xbox and some type of gaming console or otherwise. Yeah. I was kind of ticked that we didn't have an airplane in the air because I wanted to show you the actual live correlation. This is Microsoft's live environment because 98% of their hardware. If we do get permission, or we do have permission.
So we would not-
Well, hold on. That was in my safe harbor.
More of your safe harbor. Yeah.
Thanks, John. Like I said, I'm a rookie. From that, you then have various different effects of, and impacts, again, going back to the non-traditional forms of measurement and the non-traditional impacts within a supply chain. We all know that weather can drastically impact a supply chain, being able to see it housed within a single application, from that, to then understanding through data science how these various different activities correlate to the impact within an individual shipment. Beyond that, pre-planning relative to, say, hurricanes. We now know and can see based off of their API into this weather provider, a forecast-based hurricane that could potentially be hitting the East Coast.
We can essentially, from that, spin up all potential orders in Microsoft's world, both today as well as however far into the future we want to go, that could potentially be impacted and make pre-planning decisions associated to that. Do you pull it in the environment first? Do you pull it back? Do you wait? Do you put it off to the side and manage it differently because it's going to have service impacts relative to the whole? All those various different downstream impacts that come from an event like that before we would react to, whereas now we're planning for.
Wait for the mic. Okay.
Yeah. I was just wondering if you could give more perspective on the relationship with Microsoft. Have they outsourced everything to you and kind of broadly how they pay? Is it the fee-based that we talked about before, the per transaction? Do you do a flow rate?
Yeah, sure.
Okay. Just to get a sense of, because this seems like a really interesting capability. What does that do for you, and how does that link into the revenue that you generate from Microsoft?
Right. Jordan talked about his different types of fee arrangements. Microsoft does have a fixed fee plus a transaction charge. This is an additional product that they are paying an additional licensing for components. They are not holistic in either of those modes relative to us moving every single thing. It's critical when you think about the services that were reviewed this morning. Jordan and the Managed Services team have deployed people with Navisphere to manage Microsoft's global supply chain. There are other services that Robinson executes within that supply chain in the form of Global Forwarding and North American Surface Transportation. It's not necessarily one in the same.
How about?
No. I would say they're tenants.
Correct.
Our relationship with Microsoft and some of the things we've done for them during some of their disruptions has definitely given us an opportunity to have some pretty decent scale.
Do you have the same real-time visibility at the truck level to what's moving through North America for Microsoft goods? What needs to happen? What are the next few steps over the next maybe few years that need to happen for most clients to have the visibility at the truck level where in real time the goods are?
Great question. What do most clients need to do? Well, they need to make a decision that the actual visibility is important for their company. I think what you have is you have a lot of people, and again, I spend approximately 90+% of my time in front of customers. You have a lot of people thinking they need 15-minute updates because that's what they hear some of the biggest e-commerce retailers on the planet doing. The reason they're doing that is because one truckload of parcel shipments in a middle mile environment to, say, Dallas, is 30,000 potentially missed running orders a day. That's why they want that level of visibility. It's kind of going back to, say, the early 2000s when RFIDs was everything everybody had to have, and the expense was absolutely high.
All of a sudden, nobody had a way to really understand how that expense then translated into either service or reduced cost. It's kind of a similar environment right now, which is really, I think, the difference now to visibility in the form of some of these providers, either through geolocation services or through ELDs, has really come down and similar theme to some of the things you've heard today to the point where it's obtainable. The real difference now is what are you doing with that firehose of information going back to the CPG conversation I had last week. You can literally ask them, "Hey, this is going to give you a ton of visibility. What are you going to do with it?" They're like, "That's a great question.
I want 80% visibility of 1,000 truckload shipments a day." How are you then going to actionize that within not only your workforce, but potentially your 3PL workforces, and then either show reduced cost or improved service levels? Again, I would say it's more obtainable based off of just cell phone technology, ELD mandates, those sorts of things. For me, it's less about whether or not a company wants to get visibility, because it's more about why do they want it, and then how are they going to use it?
If you don't mind just dropping the mic back, and we'll take one more here and then keep moving because we've got to get to the next demonstration as well. I guess a few questions. Can you give us a sense on how deeply penetrated the C. H. Robinson customer base, and then what the cost is associated with implementing the software site wide? Lastly, do you need to handle the entire supply chain in order to provide this level of visibility?
Certainly, you'd have to get visibility into order supply chains. You would need inventory information. Sharing the information is, what's the quality like?
For your right on time definitions is what we feed into the tool. It is data-driven.
I think part of the answer to the question is to have visibility and project limit options for freight does not mean you have to run through TMS. We can ingest shipment information from any. Obviously, it takes integration. If a customer has half their business running through Robinson as a North American Surface Transportation customer, and they want all of their information, then TMC is not their Managed Services provider. We can ingest information from other 3PLs and other carriers easily. It takes an integration. Obviously, they have to provide us the information, but this tool is capable to show it's basically TMS agnostic.
What's penetration at this point?
Back to how Chad opened up. You're looking at a production environment now. We have aggressively pursued what we would deem as integrated relationships at this point to begin filling the funnel. We will communicate a go-to-market strategy here relatively quickly. You can assume sometime early to mid-summer. The approach there is that we are pulling in that funnel now, having user experience design sessions with those customers now, knowing that we are rounding out the application, or at least the adoption early on from a case study perspective, given the fact that we would then turn to each independent service line and say, "Your salespeople now have the ability to go and sell this product in the marketplace." This is not generally released. It is getting very close, as Brent mentioned. We're ready for that. Basically, every customer who has seen it is very intrigued by it.
We need to get some more. Microsoft just doesn't have a lot of surface truckload freight in North America. We obviously need to get some more truckload customers. We have a couple of those set up, and we are starting work on their integration. We need a little more truckload experience. Like Brent said, is we expect to go to market later this summer. What I zoomed through was weather, traffic, and more importantly, on Friday, I ordered Andy Clarke a new Bluetooth mouse, and I wanted to show you that it actually didn't drop at the DC location and is now at risk based off of our data science of how we are basically correlating ETA as it sits versus requested delivery date. Please take my word on it. You're welcome for the new mouse.
What you're seeing here is essentially the aggregate view of everything that we just walked through very quickly. This is called lobby visualization. Essentially what we want to do with lobby visualization is we want to allow these customers the opportunity to customize the way the aggregate reporting comes out of the tool. Again, going back to the fact you don't necessarily need a service line. It's service line agnostic, TMS agnostic. If we're deploying this and they're using it in their own environment, they can essentially set up a scrolling view of their preferred metrics and all the different things associated to the metrics they want to see at an aggregate level. That aggregate level is completely customizable. It's a rolling seven days.
They get a sense of not just impact and all sorts of other stuff relative to weather and lines of business, but they can also get a view of densities globally. If this were to be left alone, it would essentially just move. This gives them densities globally relative to where they're seeing in-transit shipments, delivery shipments, that performance. What's really interesting in a Microsoft world is launching this below now and then coming back in the fourth quarter from that retail e-commerce. Again, these are views set up based off of using their data, correlating their data to the SLAs, and then ingesting all that information I've walked you through. On top of that, all the performance measurements associated to their various different key activities. If I were to click here, you could see this is AOC.
They define AOC by this region here that's lit up. From here are the lines of business, the channels, the units by destination. This then gets into reason codes associated to why something's late, poor congestion, weather, what have you. These things are updating as the tool is capturing this information in real time. Basically, a snippet of these things are out there. Their lobby within their executive building, and it's essentially what our customers want to.
Dennis, I'm going to have to push us to Jordan here. Thanks, Brent. You did a great job. I know there's a bunch of questions on this, and that's why I'm trying to leave a couple minutes at the end. Right now, I'm going to introduce Megan Orth, who leads our Freightview team. Jordan introduced it earlier in terms of really TMS innovation to small and mid-size shippers. Megan's going to take you through a demonstration. I think we challenged her with the height of this. We wanted it to be up higher so everybody could see.
Hi, everyone. I'm Megan Orth. It's nice to meet all of you guys. I'm really excited to be here today to tell you about Freightview. We, three years ago, we just had our third birthday a couple weeks ago. We saw a need in the market for, as Jordan alluded to earlier, really big customers, complex supply chains. We are on the opposite scale, right? Small to mid-size businesses, they keep their shipments daily. They can't invest. They don't have enough money to invest in these technologies, get integrations, the heavy lifting. They just need a simple and quick technology to help them ship their shipments every day. I'm going to bring you to our customer here. This is called Global Skyware. They're out of North Carolina, small company, 120 employees. Jennifer here, what she was doing with her Freightview is she has relationships with 11 carriers.
She would go every time an order would come in I'm going to rate the first one that's the best. She just stumbled upon Freightview. What we've been able to do is not only help her save with her free quotes but also give her visibility going forward. She came onto Freightview. She added her 11 carriers. One of the magics of Freightview is you can come here. We integrate with over 80 LTL carriers through an API. You come here. They work with AAA. I have a direct relationship with them. Click Authorize. That sends a request over to AAA. They say, "Yep, that's been set up. We're at Global." Here's your rates, and it's all API based. We automate rates. Everything's automated here. You can also add as many shipping locations, and she can add as many users as she wants.
In her company, Jennifer has her customer service people because they get the phone calls, right? "My shipment's late. Where's my shipment?" She can come on here. She's got her payable people, so when a carrier invoice comes in, she can understand what they were quoted, and her warehouse guys. When they're wanting to run orders, they get in here as well. She goes to quote now. She comes in. She can upload her own address book. Again, everything is self-service. She comes in here, clicks her address. She comes in, puts in all of her shipment information, clicks Show My Rates. This is the exciting part about Freightview. We just mapped all those different carrier sites, 11 of them, came back, pulled in rates right here. Now Jennifer's life is so much easier. She has one place where she goes.
She can see all of her direct carrier relationships. The other thing you have to think about, too, with these customers, rate is important. Transit time is also important. Service is also important. We also highlight what your fastest rate is. You can come here, check out all the different-- If you need it by 3:00, 12:00, 9:00, whatever, everything's in one screen for you to visualize. Click here, whichever rate she wants, and then we automate that dispatch to that carrier, and it's good to go. Come here to your shipment screen. Now she's got all of her shipments here in one place. She can click on it, see her tracking, and she can even share the shipment. Maybe she wants to send it to her customer, send their email address.
Her customer service can get in here and understand what's going on. These are all of the paperwork. She can print her labels. That's our most exciting feature for our customers is label printing. They can print their BOL, do whatever they need to, all in one place. The most exciting thing, too, about customers is Jennifer, before, didn't really know her shipments. I mean, she kind of had a good idea, right? Her ABF carrier rep comes in and says, "Jennifer, I went into my [lumen]." She can just come right here, show them this screen, tell them, "Hey, over the last week, this is where I've gone. Here's the lanes I'm going." It also helps the relationship with the carrier, too, because the carrier doesn't always understand what their customer is doing. This gives complete visibility to each party in the transaction.
The nice thing, too, you have an export button. You click here, all the data from the BOL in an Excel spreadsheet. You do what you want with it. Customers love this feature, being able to slice and dice however they want it. Again, this is an out-of-the-box software. We don't do customizations. This is a feature you get. Freightview. I did.
On that last one that you said the carriers can come in and negotiate with them or ask, "Why am I not getting a good single rate? This stinks. You were always 20% too much.
Yep. We have in our quote references, we have all kinds of different things, right? You can come here to recent quotes. You can pull it up. You can basically re-quote your carrier. The carrier is limited, and he understands what's going on. Yeah. How do I make money?
Just let me repeat the question just for those on the webcast. The question was, when did we roll this out? How much do you actually have? How do you make money?
Yep. We rolled it out April of 2014. We had two or three carriers in. We didn't have dispatch yet. We came out very, very bold just to see what the market wanted, and it's highly. Customers are loving it. We're getting them in daily. We make money through a monthly subscription fee. We truly are software as a service, just like Basecamp and Kahoot! and all those different ones out there. We look on their website, see their pricing. That's exactly what we do. We're a flat fee based on shipment volume. Your customers love it. The other thing with Freightview that's a differentiator is we have a 30-day free trial.
So-
If you don't really know if this is. Yeah, this is helpful. This is like a thing we can do, we're like, "You can try it right out for free, see if you like it or not." We have a, what is it? People really like when you're new to an industry to get the mass use of it, a free trial has really been key.
I'm going to open up to questions for the next 15 or so. I see a few of the same chats here. I'm sorry. I don't know what the right order is. I think we have to thank both of you.
I'm asking major services. Can you offer tail services and also platform services like [Six One] does?
Yes. Actually, you guys got to stay tuned. We have about 20 customers in our beta. What we learned, with small scale industry, they're API based. Carriers are knocking on our door saying, "I've got my API." We're like, "All right, you can get on here." Truck load, not there yet. We have been talking to our customers to see what are your pain points. We're constantly doing customer research about their pain points. Their pain point is, "I'm sending out email blasts all day long. It's living in my email. I'm trying to track it. My inbox is flooded all day long." What we've created is actually a smart loading tool. This is our dashboard. Now Jennifer, who's sending out daily emails to all of her providers and carriers and brokers, she can now come here.
She can go to her dashboard and say, "All right, I sent one." It shows how many carriers received it, what was it. You can click here and, again, we do all the paperwork and logistics. Again, we're bare bones in that. Based on customer feedback, we'll modify it over the next couple months.
Can you give us a sense of what the monthly subscription fee is and-
Yeah. Our pricing is on our website. You can go to freightview.com. It is $100 up to 100 shipments a month, $200 for up to 300 shipments a month, and then over that, then we have more enterprise pricing.
In terms of number of customers, we're going to let her off the hook on that. I know.
I'll get them.
As mentioned, it is still in the early innings, but we are featuring about 1,000 customers with the service, and it's certainly very fast-growing. We don't disclose the specifics on growth rates. It's a revenue stream that's part of the service in totality today. That's some general information on volumes and customer base. All right. Again, I don't know if we're going to stay on Freightview or broaden the questions out to technology. Allison, did you have a question?
Yeah, I want to ask a technology question. What the really drive market?
I can start with Luminosity. Luminosity is built by the core IT team. We are leveraging a lot of components in the background of Atmosphere. I did mention it doesn't have to be Atmosphere frames and containerized, but we're using things like the Snowflake Horizon Catalog to keep track of SKU numbers. We're using a lot of the tracking and tracing APIs and data stores that we have for our core transportation platforms. We're able to leverage a lot of technology we already have. The difference is it is basically built as a multi-tenant SaaS play that serves the data in the background and a whole new UI that's just leveraging. I think we started our first sprint in September, middle of September of last year with Luminosity. It's a huge head start because we're leveraging a bunch of tools.
The first production release to our alpha risk users was on December 15th, eight months out. We have done three or four major releases since then in the 16 months since.
All right. I have to cut it down there. I apologize. I know there's still questions. Please save them for the broader Q&A at the end. Great job, Chad, Brent, Brett. The closer. Nice job. We're going to also just move this out while Chris O'Brien, our Chief Commercial Officer, moves in. Chris, we'll turn the floor over to you, and you're really good at navigating distractions around you, so we'll move this out of your way.
How's that? All right. My objective is to talk about from the lens of the customer how this all comes together, and I've got sort of two themes that I'll go back and forth on, and one is the current advantage, and two is this huge opportunity that we have going forward. That opportunity is really based in three things. One being the people that we have around the world and the expertise, and we probably don't talk about it enough, but these are deep, long-lasting relationships with our customers. We're very hard to displace because we can leverage that people, plus great services, plus great technology, and bring them to market with a huge pipeline of existing customers. Two, I'm going to talk about our small share.
That's another reason that gives us great hope for opportunity, both the fact that we don't do business with most of the customers in the world, and those that we do, we have a relatively small share when you think about all the different services and divisions that we have to offer. Obviously, would be our global network. We've built a global network. We've invested in that over the years, and we do believe that global network benefits from a trend of increasing shipper desire to do more services with less providers, more solutions in more geographies around the world. I'll talk about that. I'm going to start a little bit with our current customer network and what types of advantages that provides to us. On the left, you see some things we've shared before, 113,000 customers. Pretty large customer base. It is not concentrated at all.
Our largest customer is under 2% of our net revenue. Then we have very large customers on the other end, another advantage for us. Eight customers with over $100 million in business, and that's rare in our industry to have relationships like that. That's been a high growth area for us. I think the last time we were together for an Investor Day, 2013, there were only three of those relationships. It's up to eight. Those relationships we learn a lot from. Again, they're rare. Not many of our competitors have one or two of those, if any. They are like enterprises in themselves. We're deeply integrated with them. We may have our account team on site. They are demanding, and we learn a lot that we apply to all areas of the business.
That last section on the left talks about the health and scope of those customer relationships. They go anywhere from small transactional customers to global. Again, we talked earlier about the value of that office network. That transactional business is still extremely important to us. Because we have the combination of the global office network and control towers and many services, it makes really any shipper in the world addressable for us. Also, besides small to large, is the different types of relationships. On one end, somebody that just needs a transaction every once in a while to our fully integrated collaborative solutions that we have customers where we are really an extension of their supply chain and team, and we'll talk about that.
On the right, you have a little bit of new information, and this is really how we look at our customer base and how we go to market. An easier way to think about this is the small ones are $60 million and smaller, and the global are the $5 billion companies and the biggest in the world. We have a small share of those as active customers. Our customer base, the small shippers, you see the percentage of our active customers. 82% are in the small. That approximates the marketplace, but most of the shippers out there are small. We have a nice spread of revenue across all of those customer bases, across all those customer sizes that we leverage. Again, not concentrated in any one area.
Small is probably the part that's grown the most for us through the acquisition of Freightquote and understanding that's always been a strength of Robinson, but we've gotten into smaller and smaller customers, and all the way down to even sometimes the individual homeowner at the Freightquote side. Our top 500, that's been fairly consistent with our diversification and growth into smaller customers has brought that number down a little bit from the 50s that it's averaged over the last five to 10 years. That's our current customer base. We've got a strong, diverse customer base from an industry standpoint. This is how we roll up our customers into the 12 highest levels. There's a couple of areas that we're probably a little bit over the market in food and beverage and retail. Robinson Fresh drives a lot of that, but also those are high demand areas.
Customer expectations are really high. You take the combination of those two, retail and CPG, it is a fast moving area. It's an area where there is a lot of freight available, as well as large global networks. We can leverage our skills there extremely well. Each of these verticals has a lot of different subsegments. We have deep experts in all of these. Again, how people become a tremendous advantage for us is our people know a lot, not just about these customers, but about what's important from a supply chain management standpoint within these industries.
On the opportunity side, although we've had a lot of verticals that we've been very deep in for years, we are really just starting to invest more in using that as a better sales advantage and going to market more as a vertical specialist versus a generalist. We think that there's a lot of upside in leveraging what we already have, which is deep expertise and very specific solutions that get really finely turned into these segments as well as sub-segments. Each of the divisions, let's talk a little bit about e-commerce. Obviously, a huge area of demand for us and a high growth area for us. Demand is through the roof. It touches a lot of areas. I've got some stats on just our growth within e-commerce companies, those that we roll up as e-commerce shippers, receivers, or models.
The majority of that growth actually in our e-commerce business falls into e-commerce solutions that are provided to the CPG companies. They're traditional retail companies. That growth is also really high. An important thing for us is that it's another area that we can leverage expertise. Those supply chains that Jordan talked about that have gotten so complex, that have changed so much, challenge our traditional customers, especially those that have built distribution systems, that have modeled their business on the predictable nature of what just really has been thrown upside down. The expansion of multiple channels is a challenge for our customers. It's an area where they struggle a little bit more. That creates questions. That creates opportunities for us. Whenever there's questions in the marketplace, it's an opportunity for us to go in and use our expertise to provide solutions for them.
It's a global service that cuts across most every division. It's a solution that we offer. It comes to consolidation, to fulfillment, to order management, to procurement, aid for buyers. It touches a lot of our emerging services, so a big part of our growth in reverse logistics and special handling and our final mile solutions. Again, another area where expertise and demand is creating Robinson. I talked about that range of customers from transactional all the way to collaborative solutions. Collaborative solutions is the suite of customer relationships that spans all of our divisions, where we have 100% of some part of their supply chain. Including Managed Services and TMC, that is up to 16% of our revenue. I think that's important for a couple of reasons. One, it emphasizes the expertise and the need for people in supply chain management.
It's a part of the business we haven't talked about that much. These relationships are very sticky, and it's just a place where we can really demonstrate skills across multiple continents, multiple regions. Those customers we treat as a distinct relationship that they get a little bit different. In these relationships, what we recognized is that their expectations are higher. We are more seen as their partner or an extension of their team. Again, a lot of this revenue is in all of our divisions. The majority of it falls outside of TMC from a revenue standpoint. Each of the divisions will have some type of relationship that gets all the way up into the point where they've outsourced some part of their supply chain to us. This illustrates just some of the things that we do.
We provide benchmarking for them, because when we're in an outsource relationship, we want to make sure that they feel connected to the marketplace. We'll lead with that. We'll lead with how we're doing versus the market for them in order to make sure that they know that we're adjusting or that they don't need to go to procurement events. We lead with them because usually these relationships have started with some type of a commitment to service or price relative to a benchmark. We have enhanced reporting suites. For the last 10 years, we've been focusing on enhanced reporting suite. Again, we're an extension of their supply chain, so they get a distinct reporting suite. We've been upgrading it every year, and we just redid the whole reporting suite that we call Navisphere Insight for them. Most of these relationships start with a strategy roadmap to ROI.
Whether it was savings or increased customer service, at the very beginning of these deals, we're talking about, we're looking at all their data, and we're committing to some value that we can create by consolidating their orders, optimizing their network, and simply saving them money in transportation, managing all their LTL better. Some level of value is the beginning of the customer relationship, and we track that and monitor it with all those customers. Account management. We have a specific group of team. We've created a peer group within our account management group of those that are in the outsource reporting, customer relationship side. Lastly, those customers, we provide a lot of peer learning.
We put together regional or industry-based formats where we talk to them about how we're using the technology with other customers, what their peers are doing in their industry, and again, a distinct value that we can provide. When it comes to the competitive environment, to take this back to our advantage, we're just providing a lot more of those relationships. Again, last a long time, and it's up to us to continue to commit to that ROI. It's a very complex, people-rich, technology-supported part of the business, and it's a great advantage for us and a huge opportunity. I'm going to speak very specifically about customer opportunity. I shared the fact that we go to market and align based on customer size. We do that for a customer-focused reason.
There's a lot of different ways you could align your sales force and align your account management group. We've chosen customer size as the marker for the way that they might want to buy from us. The global, again, those are companies $5 billion and larger. They tend to be global. They tend to have relationships in business in multiple continents, and they tend to want to buy those services with somebody who knows all those continents. They're used to dealing with people from multiple continents all the way down to the small, where they are going to want a more local relationship. On our side, we've aligned our sales force and go to market in this way because it's how customers want to buy.
The big thing, I'm using the North American example to be conservative here because that is our largest and most penetrated market area. We start with Dun & Bradstreet data. They'll tell you there's 20 million companies in North America. We address that down to using data science to about 9 million shippers from our estimate. We take the industry that they're in and various estimates of freight spend by industry to get our freight spend. Active customers, we saw that in the first slide. Our shares within the global, within North America, those about 1,000 companies that we have in that addressable market that are $5 billion and larger, do business with about half of those. Those are very big companies. They're doing business in every single mode of transportation, and a lot of it.
Even though we're working with half of them in some regard, we have 0.3% of their freight spend today across all modes. Large, again, 1.5%-11%, the majority of the companies that fall into this small segment. Two opportunities here. One, the fact that even within our current market, current customers, we don't do most of their business, and we also don't do business with most of the companies in the world in our largest marketplace in North America. I've talked earlier about one of the things that we feel comfortable and confident about going forward is this trend of buying more with less. It's a global multi-service opportunity. It's not new. It has been accelerating, and it's another reason that we have these divisions.
We have great services around the world, but we're also benefiting from the fact that when we pull them together and orchestrate for that customer, we win more. We're uniquely positioned to win because of our investments that we've made in having great services and great people and having done it around the world. When we get into these deals, we have less competition. There's a couple of drivers I'll talk about of why we're experiencing this. One is we are now dealing with more so than traditional buyers. The people that we sell to, procurement, the need to drive out costs has entered and replaced a lot of traditional truckload or ocean buyers. Professional procurement is a big part of that trend.
Two, efficiency, just they want to do more with less, and that there's a benefit for them from an integration standpoint or risk management standpoint of doing more with fewer providers. Convenience, it's just simply easier for them as they can get together and look at more parts of their business together into visibility. We saw with the Microsoft example, being able to see everything in one place. There are a lot of drivers. Efficiency is probably the biggest one, and that there are just less people that we sell to. Throughout the recession, a lot of people were taken out of corporate America, and especially a lot of the people that we would sell to. It hasn't really come back in. It's not coming in. There's more people simply that are trying to do more with less. Again, we're positioned to win here.
We're already benefiting from it. There's fewer competitors when we get into these deals where there's multiple services in multiple regions, and we win more. I'll talk a little bit about our own experience when that happens. Just a couple of comparisons. A seven-year comparison, our multi-division customer count is up 58%. The companies that we do business with on multiple continents has gone from 271 in 2010 to almost 10,000 now. Although half of that was the acquisition of Phoenix International, but still, a tremendous amount of customer growth that's been driven by both that trend, the fact that we're addressing the trend, the fact that we're aggressively cross-selling. We can go to a customer that we have truckload with and sell them ocean or sell them visibility tools.
A lot of that is our own organic growth and the efforts of our cross-selling. We also believe it's the benefit of the trend that more companies, especially at that large size, want to do this. Our own internal information, we track in our CRM how many calls every person makes. Bob talked about that increase of sales activity. We also look at their effectiveness. One thing that we do measure is the amount of intro calls and how often those are tied to an opportunity that we closed and won. In the global size segment, those biggest customers in the world that tend to want to buy multiple services, our win rate there, our close rate is approximately double that of the average of all the rest of the size groups.
Again, evidence of the fact we've got an advantage there in being able to pull multiple services together. Again, something we're working hard on, we feel well positioned to win on, and that there's some tailwinds that are supporting us. Doing services around the world is important. Having great people is really important. Doing it well is, for us, the thing that we probably don't talk about enough, that we do this extremely well. I'm just going to talk a little bit about some of the recognition that we get from the industry on being the best at these customers. A lot of great people work extremely hard. These are just some of the awards that we've had just in the last 20 awards with some of our largest customers, some of the biggest companies in the world, just in the last year.
They're all on our webpage. If you go to About Us, Newsroom, Awards and Accolades, you'll see all of them that have allowed us to get professionally. We didn't talk about it that much. We're starting to do that a lot more, but these represent so much hard work by great people at C. H. Robinson all over the world. These are the biggest companies in the world, and they recognize us for being the best. Our competitors are in almost all of those really large awards. That was just 20. Some of the sample titles that we've won just in the past year from the biggest, and there's countless in small and medium-sized ones. Winning and doing it well is how we maintain these relationships and how this becomes real together. Industry recognition.
We've been recognized by Inbound Logistics, top 3PL for the last six years in a row. We are going for seventh. This is our peer group. Just yesterday, Gartner released their top 3PL for Magic Quadrant, we participated in that, and we're ranked in the upper right, the leader category, and the highest ranked in terms of ability to execute. We don't say this because we don't tend to brag about this a lot, but I think sometimes it's hard to connect how all these things do come together. Great people, great services, great divisions around the world. It's not easy to pull that off, and our people work extremely hard. If you check out some of those awards, those are not easy to win. This keeps us very connected and makes us really hard to beat those customers.
I'm going to conclude with trying to orchestrate everything that you've heard from the group today and with me and why this really matters. It matters that we do more services and have key services in all of the ones, the major ones that our customers are buying. Great people make that happen. Putting the right people in place with those customers, we constantly hear from them. When we win those awards, they'll usually it might be top 3PL or best vendor overall. It's almost always, this is the person that got it done at Robinson. This is the person that they recognize. With 3PL, it's always about representing some person who's made a difference at their shipper, and we do a lot to get great people to train them and to put them in the right place with those customers. Again, all geographies around the world.
Having great technology to lead and support our people, but also knowing how to deploy that in ways that shippers and carriers actually do business today. Some of that combination of some of the things you saw from an innovation standpoint, that's all based on knowing what shippers and carriers are asking from you today. Doing it at award-winning level, having long-lasting customer relationships. Our service is being rewarded with long-lasting relationships. Strategic vertical expertise, again all experienced to make this happen. We don't say it a lot, but our customers recognize it. When you do this well, when you do it all over the world, it makes us really hard to displace with customers, and it makes what we do very hard to replicate. That concludes my comments, and I'll take questions.
Christian Wetherbee from Citi. I guess I wanted to go back to the slide that you had in terms of the size of your customers, and just think a little bit about the growth rates with the different size customers. I think we had Your last investor update, I think you talked about some of the growth coming from the bigger guys. Just want to get a sense of how that's kind of played out. A second question, just about your technology and your competitive advantage. When you talk to customers, do you hear that any of your competitors are closer from a tech perspective? What kind of offering are they getting out there in the business?
Okay. Thanks, Chris. Our growth has been pretty consistent across all of these areas. We've had recently, by focusing on global, that's grown a little bit faster in the last year, but it really varies through different cycles. Overall, we feel like we're putting the right strategies in place to grow across all these areas. What we've learned from Freightquote has helped us grow small and even smaller than we did before. We thought we were great at some of the small, but we learned more there. Some that's accelerated a little bit, but in general, the growth rates have been pretty similar across customer counts. When we talk to big customers, I spend most of my time talking to our largest customers. It really depends on the relationship and how integrated we are with them.
A large employed carrier that we share business with multiple customers, multiple competitors, and some of the biggest trucking companies, they might be some of the lowest users of some of the technology. In the outsourced area, probably the highest. When it comes to our reporting and analytics, we frequently hear that we are beating everyone, and that's really what they see. They see our interfaces, so they see the web interfaces, they see the reporting and analytics, and they generally give us really high marks, and we're having some of the best reporting and analytics, which is a representation of our technology for them. Those that we're very integrated with will always be pushing us for more, and we're building around them. That's kind of how SiteSuite was really built with shippers in mind, and they value our ability to sit down with them and create better technology.
Hi, Judd Tempran. Judd Tempran, Harris Associates. Can we go to slide 72? Global customers represent 29% of net revenue. How do I square that with the fact that North American service delivers, like, 80% of your operating profit by segment? That really struck me as high, 29% of net revenue coming from those globals. Is it Coke or Microsoft that you're helping do global stuff, but then most of the profits you're making in North America?
Well, that's a great question. Global is a size segment for us. Those are the biggest companies in the world. Most of them are global in that they do business everywhere, that doesn't indicate that we necessarily have a global relationship with them. It could be a very large global company that we do business with in just North America or just in Europe. Most of them, we do have a relationship with in multiple countries. Those areas are probably the most shared across services and across geographies. 29% of the business with global really represents large companies more so than we do something with them globally.
Okay. I'm going to have to transition it there just because we're already a few minutes late. We are scheduled for a break now, to which we're going to execute here. Angie takes over here. If we could be disciplined on time, that would be great. Back here in 10 minutes, we'll turn it over to Angie, and we'll try to corral you back in as well. All right. We're going to start back up the final section here. Before I turn it over to Angie, just a quick mention. I'm predicting five times surge pricing about an hour from the [Eden Prairie] campus. Lyft, Uber do come out here. I know a lot of people have flights, keep an eye on that. At the front desk, we have a list of local cab companies.
Might take 15, 20 minutes for them to get here. There's a variety of options, and the cab companies come out here. Uber, Lyft does as well, I'm sure they're expecting this event to close at 3:00 this afternoon. Just a heads up there.
We can stagger out.
Well, if we stagger, it'll probably help them out. Without further ado, I'll turn it over to Angie Freeman, our Chief Human Resources Officer, and she'll take it from here. We will take a couple of questions at the end of Angie's section, then we'll go right into executive Q&A.
The good news is that a few people left. There's a little more room to spread out. The bad news is that we have less body heat in this room. Next time, we promise we're going to pass out C.H. Robinson blankets to keep everybody warm. We thought it would get a lot more toasty in here, we figured this was better than sweating. As Tim mentioned, for those of you whom I haven't met before, my name is Angie Freeman. I'm the Chief Human Resources Officer here at C.H. Robinson. I've been with Robinson for 19 years, the last five of which leading HR. Prior to leading HR, I led a variety of functions, including marketing, PR, public affairs, and investor relations.
I had the pleasure of working with some of you back in my IR days, it's fun to see some familiar faces. I told some people today that it was kind of fun to be back in the investor relations arena, they thought I was lying. I'm not lying. It is really fun to be back. Got a couple of objectives for today About why C.H. Robinson continues to strongly believe that people and culture are a powerful competitive advantage. That shouldn't be a surprise. I think that's been a common theme through the whole day, we're going to talk about that.
Second, we are going to talk about how we are evolving some of our talent strategies to support the business change and transformation you have heard about today, and also adapt to some changes in the talent marketplace that are impacting all of us who are trying to acquire great talent. Since our IPO 20 years ago, John mentioned this this morning, people and culture have been a really important part of our story and how we describe our strengths and what makes us unique. It is no coincidence that the first two words of our mission statement are our people. Combined with our leading technology, the supply chain processes that you have heard all about today, our people, who are highly motivated, driven to succeed, engaged, and customer-centric, they make all the difference and enable us to continue to win.
As Chris mentioned, Robinson is consistently recognized for being one of the best in our industry and for being a great place to work. As a service company, that is no coincidence. Those two things go tightly together. The recognition and the awards for being a great place to work is especially meaningful because the awards are based on employee feedback that is gathered anonymously by a third party from our employees about what they appreciate about working at C.H. Robinson. To end with that, we also conduct our own employee engagement surveys, and our engagement scores are consistently very high. Just like our employees tell us that Robinson is a great place to work, our customers consistently recognize what our people do for them.
It's very common for our customers, as Chris said, to tell us that the acumen and the expertise and the dedication of their Robinson team is a big part to why they choose to work with us. Our employees are engaged, they are empowered, and they are enabled. As a result, they perform at a higher level. Let us talk about our global employee base. You heard pieces of this today, but we thought it was important to bring it all together for you. We have about 14,400 employees around the world today in 39 countries across five continents. Thanks to those employees, we speak over 80 languages. Today, about 25% of our employees are outside of North America, so we are increasingly globalized in our talent base. Another interesting fact about us that I just put up on the screen is that we are, as a company, we are about 66% millennials.
A leading global HR consulting firm told us that those demographics make us look more like a Silicon Valley company than your typical traditional Fortune 500 company. We think this is a huge advantage. Millennials are digital natives. They have grown up immersed in technology. They are entrepreneurial, they are collaborative, they are creative and innovative, and they are highly adaptive to change. All traits that are really valuable to a service company that is powered by technology in a highly dynamic industry. Again, we think we are in a really strong position with the talent we have at Robinson. So what are the key defining elements of Robinson's culture? Culture can be a hard thing to describe, but we all know it when we see it. We all know that it is really important to how well a company serves its customers and how well a company performs over the long term.
Here are some of the elements of our culture that we think have been really important to our success and will continue to drive our growth into the future. First and foremost, you've heard it a bunch of times today, but a defining element of Robinson's culture is our focus on performance. Our people want to win, and they bring their A game every day. The strive to perform is due to a couple things. First, it's about the people we hire. I mentioned this before, but we're looking for people who are self-starters, who are motivated, who are driven to make an impact, who want to be part of a team, who are dynamic and engaging and curious. It's also about the culture and the expectations that we put those people in.
It's about how we pay them, how we motivate and incent and reward them through our Pay for Performance compensation. I'll talk about that some more a little later. It's also our promote from within culture, which recognizes and rewards those employees who are making the greatest impact and driving value. Our culture values relationships and is highly customer-centric. Part of the way that we reinforce that is we empower our employees and our frontline managers to make the decisions they need to make to support their customers and their carriers and win in the marketplace. Being experts and using our business and supply chain acumen to drive results for our customers is a core expectation. We value hard work and hustle and those who don't settle for good enough.
We also deeply understand that change and innovation are today and have been a fundamental reality in our industry. C. H. Robinson's ability to constantly evolve through all kinds of marketplace conditions and all different chapters of our history has been a core part of our success. Finally, we take a lot of pride in operating with integrity and professionalism and being a good corporate citizen. This is a culture of success and of growth. This is something that matters to everyone. Being part of a team of people who are smart and talented and also want to win is a really big part of what people tell us they love about working at C. H. Robinson. I mentioned before that about a quarter of our employees today around the world are outside of North America, which is newer for us as we continue to globalize.
As we have expanded globally and made acquisitions, we have worked really hard to preserve and grow this culture globally. A group of us visited Australia last fall to attend an APC employee meeting and meet all of our new colleagues. I'll tell you that the cultural similarities, for those of us coming from Robinson, it was like walking into a C. H. Robinson meeting. That has made for a very smooth cultural integration. Andy mentioned today that cultural similarities is a really important part of how we decide where we want to invest and how we make acquisitions. A group of us recently visited Asia, Malaysia, for our Asia managers meeting. While we were there, we visited the Kuala Lumpur office. Again, the cultural similarities were striking.
The same high caliber of talent, dedication to success, commitment to customer value, all the same traits you would see in any other C. H. Robinson office around the world were felt very deeply across those Asia managers in that Kuala Lumpur office. All around the world, we've been able to keep what we believe is a very special culture and grow and preserve that, and that's been an instrumental part of our ability to serve customers globally, which, again, is a very important part about how we compete and are different, as Chris O'Brien talked about. This is not your usual investor day fare, but we thought it was a really compelling way to illustrate and reinforce Robinson's culture of performance and engagement. This is one of our employees. His name is John Stenderup. John is a business development manager in our Robinson Fresh Monterey, California office.
This picture was taken about one week ago as he was making his way to base camp on Mount Everest. Sometime in the next two weeks, he's going to summit Mount Everest, and when he gets there, he's going to plant that C. H. Robinson flag you see in his hand. Many of our employees are following John on his climb through his blog and through our internal social media platform. I just think this is a beautiful illustration of this is Robinson. It's people who think big, who challenge themselves, who are cheered on and supported by their teammates, and who are so proud of the company they work for that they want to tell the world what team they're on. That was culture. Let's talk a little bit about talent strategies and how they're evolving.
We've heard a ton today about a lot of change in our industry and our marketplace and at Robinson. We're also experiencing a lot of change in the talent landscape. We have more competition today for top talent than ever before, not just within our industry, but across multiple industries, companies who are looking to attract the same types of people that Robinson has always wanted to bring on our team. Jordan talked about this. There is a supply chain talent shortage, because of that, we have to be really good at attracting, retaining, and developing our people.
The other big change that's been happening in the talent landscape is that as new generations come into the workforce, millennials, who we've been now brought on, and also Generation Z that's coming up right behind them, they have different opinions and preferences about the employers they choose to work for. To stay ahead of those changes, stay competitive for top talent, and also ensure that we can continue to support our business changes and transformation, we have been adapting some of our talent strategies that you may have heard us talk about in the past. The first is that while we're absolutely still committed to the same traits that we have always looked for, again, I mentioned them, self-starters, motivated, curious, dynamic, collaborative, team-oriented people, we are starting to augment who we hire with more people with technology and supply chain and analytical skills.
We're continuing to hire salespeople, account managers, and carrier sales, but we're also hiring many more developers, data scientists, analysts, engineers, and supply chain professionals so that we can ensure we have the right skill sets to curate great teams for our customers in these sophisticated relationships. We're also looking for more people who can do complex selling to support Chris' team, and also people with really sophisticated and superb account management skills to manage these large, global, multi-geography, multi-service accounts. We still are very committed to performance-based compensation, and in fact, in many roles and parts of our business, we're actually increasing the amount of performance-based compensation as a factor of their comp to make sure that we're recognizing and motivating individual and team contributions to performance. We also are doing that because we want to make sure that we're creating meaningful differentiation for our top performers.
We're committed to and actually increasing in many roles the amount of our compensation that is performance-based. John talked about role specializations that we have been working on and starting to more differentiate and specialize in our roles for a couple of reasons, to drive productivity and efficiency, increase expertise in certain areas of the business, and also enhance customer experience. Tandem with that, what we've been able to do then is create job families and very clear career paths, which is an important recruiting message for top talent. We can explain to our people within these job families, here's the progression you will make in this career. Here's your opportunity. Here are your performance expectations. Here's what you need to learn and grow to achieve those objectives longer term.
That's been a very compelling recruiting message that our people really appreciate because they understand how they're being measured and what they need to do to perform. In addition to that, we've been increasing our investment in learning roadmaps, really robust curriculum to support those people as they progress in those career paths so they can more rapidly accelerate how much they understand and know about logistics and supply chain expertise. Excuse me. In addition to those learning roadmaps and that investment, we've also been investing more in development just overall. Leadership development programs, high potential development programs, account management development programs, and also a very robust onboarding program that we think is the best in the industry.
This commitment to development and learning, this increased investment, is not just very important to ensure that our people are really productive and are successful and perform at the highest level possible. As I mentioned, it's also a really important aspect of how we're recruiting people. We have our recruiting team, who is normally spread out across the U.S. and the world. A bunch of them are in town this week to get ready for fall campus recruiting season. I met with a couple of them yesterday to ask them, "What are you hearing about from our new recruits, from recent hires, about why do they choose Robinson?" Lots of these people are very talented, have lots of options in the marketplace.
Number one, by far, the answer that they get from folks about why Robinson, is that Robinson has a reputation for investing in its people, that we develop them, that they'll learn a lot about the industry, that they're going to gain deep expertise, and that they have a lot of opportunity in their career with the company. That career path message in development has really reinforced that. The other thing we hear from them is that they really like that we're global. They understand, especially those who've been educated in supply chain, that our global footprint is a big advantage for us as a company, and therefore they'll have more opportunity. Interestingly, another piece that I just think is really relevant is they like that our culture and our environment is fun and professional. That's important to them.
The last thing that we're doing in the realm of adapting our talent strategies is deploying data. Just like we use data to drive lots of decisions in other parts of our business, we're also using data to inform our talent strategies. We set up a workforce analytics team, and they work in close collaboration with their business analytics teams to help ensure that we're using information to create talent strategies, measure impact, and then refine. All right. I'd wrap up by saying that, again, our employees are engaged and driven to perform at a higher level. They're empowered. We ensure that they have the capability to make the decisions they need to make to support their customers and carriers to win in the marketplace. They're enabled. They're supported by the world's leading platform of supply chain information and technology and processes.
A very powerful combination that means that they can perform at a higher level and continue to drive our growth and success. Thanks.
Thank you, Angie.
I just finished on the shot clock with no time for questions. Perfectly done.
Because we're going into Q&A, Ken, why don't we have your first question for Angie, but let us first make the transition to get the executive team up, and then we'll hold and do that. We'll just take one minute to do that, and then we'll start with Ken's question. Before I turn it over to Ken to ask the first question, a little bit of the ground rule that I've thought about in advance. I'm sure we'll get a surprise or two. When you ask your question, if you want to direct it to one of the leaders, please do that. If you just have a general question and you want to leave it to my judgment where to steer it, that's fine, too. I'm happy to try to do that.
If you don't specifically mention who, I'll tell you my best guess who would take that question. We'll let Ken kick it off with Angie. From there, we can open it up. I guess if we want to stay on people for a little bit, given that we didn't have questions last time. However you want to handle it. We've got about 30 minutes here for Q&A, and we'll pass the mics around again if we could. Wait to get the mic and have it as 30 seconds would be good, so folks on the webcast can hear well.
Great. Thank you. Ken Hoexter from Merrill. Angie, I was actually just going to ask you a quick one, but I'll also have one for John as well. I would ask, given how advanced your staff is and how desirable your staff then would be, given the amount of talent that you start up or start up from, you started St. Louis, you're here in Chicago, have an increasing amount of staff who have been on or at all these startups in New York and the other startups. Then I guess follow it on maybe how have you seen patterns or just the e-commerce, I don't know how it flows to other e-commerce vendors?
Thanks, Ken. Let me turn that first part. What I would say is that it's not a new phenomenon that other companies want Robinson talent. We've had an excellent reputation for a long time for having a very good formula for trying to bring people on, bringing them into a culture, and continuing developing them. We've always had to be really good about ensuring that our people understand the best career opportunities and ensuring that we're hanging on to those great people and continuing to develop them, and again, that they understand where they want to be is at Robinson. I won't say that we don't ever lose people to competitors or other startups.
Of course, that happens sometimes. I think we feel pretty good about our ability to hang on to the people and again, ensure that they believe that Robinson is the best place for them. One example, a very large e-commerce retailer opened up a technology center here in Minneapolis, and as of today, we have not lost one of our IT people to that large e-commerce retailer.
I would just add to it that we have had a longstanding practice of hiring people right out of school.
That's how you get to a lot of the demographics that Angie talked about. Part of that, as you progress and become more into leadership, we have been very consistent about extending long-term incentives, equity awards, in exchange for non-solicit, non-compete agreements that we all have, and that we've been very upfront with all of our teams that we're looking for a two-way commitment from our leaders. That's part of what helps our position in the marketplace as well, too, is we all have long-term incentives and we all have commitments to the company that helps keep our team intact and we see how that. There's really a lot of different ways that we can talk about that, where you refer more to the demographics of our team and our analysis.
Within each of the different divisions, I'd say when we look at freight patterns, there's been pretty distinct changes. We didn't talk about it a lot in business content, because of the changes in e-commerce, most companies have many more places where they're positioning inventory. In a lot of cases, freight is bypassing distribution centers and bigger facilities and they're freight pooling. Obviously, there's more final mile activities, more parcel stuff, and there's a lot more LTL freight and different types of shipments leading up to that. As inventory patterns change throughout e-commerce, you see the density of the freight that goes with that. The Microsoft example, I know there are a lot of instances where freight is skipping locations. Chad and the team pointed out around how Sky Castle distribution works.
We do see some changes in the lane patterns and the distribution of freight that are associated with all the different same commerce activities that you heard about during the day. With regard to autonomous vehicles, it's obviously a very evolving topic that really needs more thought into it. From my understanding of it today, I think it's going to be more of an opportunity than a threat. I know that there's a lot of money being invested in the vehicle side. A number of our stations are trying to adapt that to the commercial side.
If you think about how that autonomous equipment is likely to come into market over the next three to five years, the most logical scenario that it would be in more dedicated lanes of longer length haul, where you could eliminate the driver hopefully over time by increasing the autonomy of the vehicle and save the labor costs that are associated with that. It's also very logical that they wouldn't start in the most complicated intercity local delivery types of routes, that it would be more long haul. If one looks at the economics of it's probably going to be in something pretty similar to intermodal, where you have a long length of haul, a cost-saving advantage from the elimination of labor, probably at least initially focused in more dedicated lanes.
If you think about how that capacity would likely continue to phase itself into the market, I think there's a great opportunity for the services that we provide to acclimate to it and to figure out the right freight that we have to take advantage of and go into it. Again, there's a lot to come on that, and it's a topic that we're staying close to it. I think it could really be an opportunity for a third party like us more than it's been a threat. We get that question, obviously not only coming out of the call, but throughout our history in terms of people and we're adding and how we're adding them. One of the benefits of going through the segments this morning was to actually break out where we did it.
If you look to my right here, you think about the volume that they took on during the quarter with 103% headcount growth. Mike in Tampa, Florida, was actually down headcount despite the fact his volume was one of the areas that sort of broke double digits and the tremendous work that they did at sourcing. It's been a great topic of discussion in terms of when we break out the segments and their ability to be productive, and it's been great. You look at where we're making investments as an organization, and we've talked, as hopefully it came across today, in multiple ways, the amount of investments that we're making in technology and Managed Services that's driving the headcount addition.
As we on the one hand get the questions, which I think are incredibly valid, and I think we're here to address them, on are we reacting to the hail and sleet of digital disruption? Are we reacting to technology? Are we reacting to all these things that are out there, new competitors, emerging competitors, existing competitors? We're making the investments in the right place, and as a result, it's driving headcount add in that particular area. It's coming in IT, and you're seeing that, and you're also seeing it in Managed Services. We believe the investments that we're making are the right ones. Despite that, as John kind of addressed the question that was asked earlier today, is the vast majority of that is being spent. We're not hitting
Cost is showing up into the P&L statement. We're making sizable investments, still at that same time leading the industry with what's working.
Gosh, maybe we're done when this comes out.
Right.
Size might not fit for anyone. 9 billion-$10 billion in terms of no average or your service. Logistics, which has to have special credits, which is specific to what some of the opportunities are that we're absolutely backstory.
Great. Before you go, Dan, I should have done this earlier, we've had points out if we could limit it to one question and then we'll certainly get back around to you just so we can. I see a lot of hands going up. Chris, you can take that as the next question to come. Please try to limit it to one question.
Probably to start with the pipeline. Every time we have an opportunity, we want to maximize that opportunity, one that's just gone through the $1 billion, but that number was exponentially smaller just five years ago. The demand is really in every continent. There's a global component to it. There's our Surface Transportation business in Europe. There is our forwarding business, and the origin of a lot of that e-commerce originated in Asia, as well as an e-commerce opportunity where e-commerce is growing faster here. It impacts where our operational footprint is in the next years. It is a huge area of demand. There's a lot of it. One is just growing, but even our traditional shippers, again, struggle with a distribution network that's associated with e-commerce and the extreme, that's where they have to have inventory.
That's driving an outsource more to the third-party warehousing services, it's harder and harder for them to own a physical footprint. That drives challenges with our traditional customers, which lead to opportunities for us. It's really across the board. There's no different part of the world that isn't impacted equally in footprint. Then again, a lot of services you asked about, some of our 3PL services, especially with the direct-to-home e-commerce. A lot of that goes back, a lot of it gets returned, driving opportunities for our reverse logistics businesses. We've been developing our final mile network of providers, and that's driving it, as well as our Surface Transportation that covers. Those are. It's across the board is really good news equally.
Bascome Majors from Susquehanna. Bob talked a lot earlier about some of those returns.
Historically, a lot of the successful 3PL businesses out there were here derived from square peg, round hole ideas that have been super designed with incentive programs that was well designed and mapped to empowering people to execute.
Absolutely. It feels like one of the themes in here all day has been technology has more materialization happening in the business in some ways.
How is that impacting your people in the freight brokerage business and the B2B side of the business, your sales people? Have you redesigned incentive programs in any way to drive outcomes that you want to see going forward as sort of norm?
That's a great question. Part of what I forgot to talk about was our company-wide event that we had in Vegas with incentive programs.
You want me to go back?
Here in L.A., I explained that briefly. Fortunately, everyone in one of our offices saw almost exclusively on how that paid. There was very little around the individual incentive plans. It was about how did your branch office perform this year? That's an important part. It's always been an important part of our history. Obviously, we've always been more specialized away from that model where it was kind of an account of all three. We found that that type of work overall lifted the profit and the type of performance. There has been a pretty significant change in those incentive programs. Every answer was in the form of sales goals, secure account-based P&L, not just being incentives to drive the growth that we expect, and also to drive the retention of those key performers.
There is still a team-based component of compensation set up to virtually all the people in our branch members. It is much more geared now towards the individual productivity within those buckets. Your observation about the recentralization, I think, is a good observation. Part of the network transformation has been the introduction of service line leadership and network leadership. In the past, the executive team would have been asked. Everybody had accountability somewhat for everything. Today, I have leadership over trucking, leadership over LTL, leadership over the Global, leadership over e-commerce, and then leadership over the network. They work very closely together to make sure that the network understands the service line strategy closely and they know how to take that to market commercially working with business teams across the other divisions. The engagement is high.
I would say the engagement is very high on the front lines and with the management team. It's out in the field. They believe in the vision, they believe in the mission, and they're highly motivated to continue with.
Any comments? Is there something that you understand that we're trying to phrase here? Forgive me. You said something to the effect of
Okay. Can you elaborate on that a little bit more? Are you seeing that already? Do you expect to see that going forward? In your kind of net revenue guidance, your margin guidance, is some of that potential pressure being tested when these guys come in and make a single-ish margin?
The comment was really hopefully after you listen to us today and have seen our demonstrations and talking about things. When I think about the non-traditional competitors and the changes in the landscape, the competitive landscape that we're seeing, I'm not very concerned about the mobile app that's going to destroy us or the algorithm that's going to pick us off the sea or all the rest of that. I'm sure there will be innovation and technology, and we'll go with that. The stuff that I think has disrupted more other industries is people aggressively going after market share or people breaking rules or people trying to reinvent something with very aggressive process changes or really trying to disrupt the business model by unusual pricing, steep discounts, subsidizing, whatever you want to call it, the market share, doing different things.
In my mind, in the short term, that's probably the biggest threat in terms of risk to the competitive landscape. I'm sure we're going to have to continue to evolve our people and technology. To me, when I think about on a very high level around how this team needs to react to the next three or four or five years, it does come back to that how do we make sure that all our business processes and innovation and our technology are aligned and competitive with what's in the market? When people have come, we've had traditional competitors in the past who have very aggressively gone after share. Customers, most of them even try to take advantage of that.
They're in very competitive businesses themselves, and if somebody comes in and offers them a lower discount, even if it's not sustainable, they may take advantage of it for a while. In the freight world, one of the things that's true is most everything replaces at least annually. It's a little bit more difficult to try to hang on to that freight. If they are just kind of playing market share and they are changing a lot over time, it's hard to sustain it. We'll see how that plays out. We haven't seen any of that yet. The answer to that's really more of an ideal than comment on my point when we think about things like B2B or look at really aggressive digital transformations. That's more of a theory. We really haven't seen any behavior like that to date.
Of course, not in our guidance or not anything that we would try to quantify at this point. Next question. John, maybe pulling up to probably five or so, right? Now we have a lot of information and kind of human judgment that goes into that. It's natural you'd use margins are sustainable. How do we think about that? [This is Arun. Bob Kapell]. I mentioned this in his presentation a little bit, that there have been a series of regulations over the last seven or eight years around safety and CSA and hours of service and ELDs. Each of them have knocked some capacity out of the marketplace and cleaned it up. I'm sure there will be some disruption in December around that, and we'll react just like what I've laid out.
I don't think we believe that that's going to have a sustainable long-term impact. It'll just cause some short-term turmoil, maybe some tightening of the capacity, depending upon how big it is and how it goes out. One of the things that we did talk a lot about, though, is that historically, one of the challenges of the retail model was that the quality of the capacity was not equal to the quality of more dedicated, large carrier capacity in the marketplace. One of the positive byproducts of some of these changes around safety, hours of service, and ELDs and so on, is there's going to be a much more leveling of the playing field in terms of the quality of the capacity. Probably the age of the equipment might be one of the big things that's left where you can try to differentiate.
I think in a certain way, while it's caused short-term disruption, all of these changes have probably helped us, helped the credibility of our capacity, and helped us compete in the long term. It'll be an event in December. How big we'll see. I don't think it's fundamental to our structure. I mean, realistically, I think there will be impact in the event. If you look out longer term, I don't look at the ELD mandate or implementation as a negative for us. I actually view it as a really positive thing. You can ask what else the transportation industry, the way the power is being run more frequently, tracking, more visibility around what's going on in the surface. At the starting of that, ELD will be bad for the second I like making examples in a great business meeting today.
Say if I've got a person that has to absolutely have to get 10 loads into Chicago, and I've got 10 trucks in Chicago, and they do their best to match those together. They may not have the exact coordinates of which truck is on the north side of the city, north side of Chicago, east side of Chicago, or west side of Chicago. They end up sending, in some cases, trucks empty trucks policing the city, trying to get the same freight. When we're able to fully integrate with the ELDs and get real-time visibility to that capacity, both while it's empty and also as we're able to take that digital freight matching to a longer haul, which is not going to necessarily have a negative margin play, but it will actually make the most efficient supply chain.
It can take those empty miles, have significant impact to reducing the empty miles on behalf of that carrier, which allows us to buy more effectively because this is a great capacity of that carrier, which allows us to then also keep that carrier more captive within the realms of the supply chain. Because when I've got that ELD information, location services on the phone, now I can start.
in Charlotte, they can start to make recommendations that can become lockdowns and visibility piece that'll be facilitated through ELD is, we see as really exciting work with what's coming for us in the retail space.
That direction there. I want to connect those points.
With respect to what increase the win rates, obviously we don't really discuss our win rate quite as much. Over the past couple of quarters have been unsustainable. The figure wide is that they have been very happy customers when we've been at 10% and there's a lot of room to go there. If you talk about some of the drivers behind that sentiment, the win rate, is there any way for us to think about what the upper bound could be in terms of the change in the EMA?
There's the answers with that.
Yeah. We spent a lot of time over these last couple of years to try to define the processes, both transactionally and operationally. We started at the top and on the largest, most complex opportunities and started to, I don't want to use the term mandate, but started to really define the process in which we went about responding to those. By leveraging data more effectively, by leveraging that process more effectively, we find that we're getting better at it every single day. The results of going from 6% win rates on large quote events to about 10% win rates on large quote events is really meaningful when you're filtering tens of billions of dollars of opportunities. Filter that we do today. I should say that we've only applied that filter to opportunities of greater than $10 million. What is the upper bound of that?
Well, as we learn more from those winning quotes and from those quote scoring methods, we continue to improve those models. We continue to make that process more automated and more deployable at the customer level. Again, the bounds are pretty high on that. The ability for us to continue to take market share is real and is something that we're highly focused on. To go back to my comment earlier, the fact that we've had margin compression, I do not see that as being correlated to our going public. I do not see them necessarily driven the other. The investment science, the investment process has allowed us, said really simply, to understand the markets that our customers experience based on how they freight. To the comment earlier with the group, Costco experiences the period very differently than Beech-Nut when they ship a load from Los Angeles to Chicago.
We have to develop the models that help us understand how those customers experience period and it becomes rates, so to speak, more often, which is driving those numbers. I expect that to continue going forward.
I'm going to take.
Yeah. Morningstar. Question for Mike on the Global Forwarding front. The past three to four years has been fairly meaningful in the supply glut, the ocean and the air side with the proliferation of capacity, belly space, so to speak. Wondering if you're seeing any sort of supply-demand balance improving or will it improve over the next 12-15 months? I'm guessing at the end of the day, it's excess capacity that's creating the pressure on yield and so forth.
It is. From an air freight perspective, we're starting to see that cycle. We also see some of the recent disruptions that we've had with the Suez, some things that are going on the Red Sea, which seems to pick up every month. We've seen a lot of ocean freight, to an air freight, the last three months where capacity has been tight. The alliances on the ocean side trying to create the alliances and trying to understand what vessels are going to be on those lanes has created some slowdown in bookings that we're seeing, which has backed up the bookings. Once they figure out these alliances and understand on a regular basis, the sailings, that I believe will start to smooth out. We've had a backlog of two to three weeks in the last couple of months, which has started.
Okay. I am going to turn it over to Andy to close us. I'm watching the clock here.
Are we good?
Yeah. I'm going to let you use this mic because I hear it's more effective. Thank you.
Thank you, Tim.
You will hear me.
I would like to start off with a thank you all first very much for making the commitment. We know that it is investment of your time and of your day. We certainly hope you feel like today you've gotten a very large return on your investment. I'd like to thank my colleagues in the room, Megan, Brent, and Fred, who I'm sure is back programming right now. Thank you all very much. I think you did a wonderful job demonstrating the power of our technology and the impact that it has on our customers. I would also like to thank Adrienne and Tim, and I would like you to give them a round of applause. They did a wonderful job.
They both did a tremendously wonderful job of not only setting this up, but keeping us on track all day, and graciously whipping us relentlessly to get our projects and our presentations in on time. Finally, I'd like to thank my colleagues up here on the stage. It's fantastic to be able to have my job as Chief Financial Officer and to spend a lot of time with investors and be able to tell the great stories. These people up here do it much better than I do. I was very pleased that you all came in and got to hear it firsthand. They represent more than 14,400 people that we have working on our behalf
By repeating everything that you've told the team. If it didn't come out today, I'm going to emphasize it one more time. It matters. It absolutely matters in our customers. It absolutely matters in our relationships. Carriers absolutely matter in our relationships. It matters in our business. Technology matters. I think for the first time, you got a glimpse tonight of the fact that we play a global game. What we're playing is three-dimensional chess. While everybody else is out there talking about an app or talking about a program that will let you track a truck, nobody better qualified to tell you the impact of that than Brent when he's talking to our customers and saying, "Great, you can track a truck.
What are you going to do with it?" The investments that we're making real-time, the investments that we are expanding real-time that are impacting our profit and loss are being made for the long term, so that when technology has ultimately adapted, when our customers are ready to transact the way that we all believe that they should, we are there for them. We're going to be able to meet them where they like to buy. The thing that I think came out really in the introduction was the number of customers that we're currently transacting with. It's a large, nice number. The better news is the fact there's more. Despite the fact that we've got the prettiest people on the street, we need more people.
We would like to, not only for us and for our investors to know that we're going to continue to make those investments, make investments in people, make investments in long-term customers, make investments in technology so that we can service those customers and we're going to continue to invest in the processes that allow us to invest in mass results for our customers, invest in mass returns for our investors. Thank you all very much for coming in.