All right. We're going to get going with our next session with C. H. Robinson. Really happy to have you guys back at the conference. We've got Dave Bozeman, President and CEO, Damon Lee, CFO. There is so much to talk about.
I know.
both industry-wise, C. H. Robinson-wise. Rather than do anything, we're going to jump right into questions, if that's okay. I want to just knock out some of the quick industry things right away. Obviously, the big news over the last week was the Montgomery ruling. I guess, your initial view of this, right, what does it mean to your business? What does it mean to your insurance costs? What does it mean to how you change carrier vetting? What does it mean for the industry, large broker, small broker, industry capacity? Very open-ended question, but I think it's obviously topical right now. We got to address it.
Where we want.
Let's get right into it.
All right. Hey, happy to be here. Thanks for having us. Let's just jump right in, set the record straight where we are. Montgomery case, we expected to win that case. We went in to argue to win that case. It didn't go in our favor. We had a playbook for both sides. We've said that. Be it favor or not favor, we had a playbook. We executed that playbook, because it didn't go in our favor. That being said, what does that mean? Number 1, we have one of the safest networks in the industry, just period. For every one severe incident we have, that could be an incident, we broker 500 million miles. That's just a fact. Super safe. Our vetting process, one of the strongest, if not the strongest in the industry when it comes to our carrier vetting.
We're going to continue to do that. We have a strong balance sheet. We have auto liability insurance that is some of the strongest and rivals even [assets], $137 million in auto liability, $86 million in general liability coverage. Strong when it comes to that. What does this ruling mean? Listen, at the end of the day, we're proud about who we are. We're super safe. We're going to continue to go. We were trying to lead the industry on bringing clarity in the industry. One way or the other, we have clarity, and now you move on. We do think that this will be somewhat of a headwind to smaller non-scaled brokers from an insurance perspective, from a scale perspective, maybe some small carriers as well. That'll be an impact.
If you think about the ruling, you have shippers that could be impacted as well. You need a trusted scaled broker to stand up and really drive this. We are that trusted scaled broker. We are squared away in doing this. I don't know if you had to add anything.
I just had one follow-up to what Dave said, which is, look, we do believe this will lead to a consolidation in the industry, for all the reasons that Dave mentioned, right? The economics of small and medium brokers, higher insurance cost, just the confidence in shippers to use small and medium-sized brokers because of all the liability connectivity there. We believe this will lead to a consolidation in the industry, and we believe Robinson will be that consolidator.
Just a couple of quick follow-ups. Maybe, Damon, practically speaking, when and by how much do you think insurance costs for you change?
Yeah, when would be our next renewal cycle? For 2026, we're locked in for insurance coverage. We'll start those negotiations the second half of 2026, and certainly, that impact, that'll be felt in 2027. Look, insurance costs today are less than one half of 1% of gross revenue for C. H. Robinson, so it's not going to be a material impact, even if we see a demonstrable increase in insurance rates. Certainly, look, our job is to manage challenges. We do it every day. Higher insurance costs will be just another challenge. I would say, though, I view insurance costs as a transitory impact on brokers, meaning it'll be an impact on brokers initially, it'll ultimately get passed on to shippers, and then ultimately get passed on to the consumer.
I don't view higher insurance costs as being a structural deficit for brokers forever. I view that as a transitory cost that'll ultimately end up being borne by the consumer.
Scott, to finish on that, keep in mind the scale here. At the end of the day, we're going to ship over 100,000 shipments. Today, we do 37 million annually. This is not our first rodeo here. We've been doing it. We'll continue to do it. We set the bar. This is a scale play. We've adjudicated things for years, and this doesn't change that. We were just trying to drive clarity and safety within the industry.
Okay.
Just maybe last thing on this, for me at least, what changes to from a carrier procurement standpoint, we just had a panel with Schneider and they said they were using 70,000 carriers at the peak during the 2022, and now they're down to 14,000 carriers. Part of that is being more rigorous with who they're using related to cargo theft and all this sort of stuff. Do you have to make changes to your carrier, who you're using? Obviously, there was a "60 Minutes" piece about Super Ego, chameleon carriers, non-domiciled. Do you have to make changes in terms of who you're using?
Look, we're going to try to stay on point on some of that.
Yeah.
You go all over the place.
Yeah. Please
on a lot of that.
Yeah.
The facts are this.
Right.
We have a vetting process that we think is industry-leading. We do partner with Highway and GenLogs. We also have our proprietary technology as well. We're a data company, as you know. If you look at it, we look at the results. Our process has prevented several people from accessing our network. We've stopped chameleon carriers, hundreds of them. Our fraud is down. We have a 99.9% fraud-free type of network in what we're doing. These are things that people don't know, but that we're driving and that we're leading the industry. We lead a consortium of companies, including my old firm and Amazon and others, when it comes to fraud. I would think our technology and our processes that we're doing are helping to lead the way, that will continue to do that. Strong vetting process.
If you start getting into driver-level heuristics, some of that is legal. That happens through the FMCSA. Our vetting on carriers is strong. It'll continue to be strong, and it'll continue to get better with the data set that we have.
Scott, just to put a bow on what Dave said, we feel like we've had an industry-leading carrier vetting process for a very long time. Right? Are we going to make wholesale changes to that process? No. Are we going to continue with our continuous improvement mindset like we do on everything else in our business to make it better? Absolutely.
Okay. It sounds like not a whole lot has to change for you. It's a question of to what extent does this catalyze consolidation within the brokerage industry.
Yeah. Similar to my small and medium sized broker comment.
Right.
I think that same comment applies to small and medium sized carriers. I think that's the way we think about will there be a consolidation of carriers in the industry?
Yes.
Absolutely, there will be.
Does that change the gross margin profile for a broker if you're procuring capacity from larger carriers instead of smaller carriers?
Yeah. We believe our cost to hire model is industry leading. We believe we have the best revenue management capabilities in the industry. We'll continue to procure transportation at industry leading cost regardless.
I want to now turn to the market, right?
Yeah.
One thing that was interesting, just listening to Q1 reports, listening to some of the other brokers at our conference, someone said, "Our spot volume's up 2% and our contract volume's down 18% or 19%." Then talked to another, a private broker, who said, "Our contract volume's up 2%, but our spot volume's up 20%." Right? Meaning other brokers seeing sort of a big sort of shift more towards spot volume. You guys were the opposite, right? At least in Q1 where your contract for spot mix actually increased 5%. Right? Why do you think you're sort of seeing something different? I would have thought spot volumes would be growing given the tightness of the market. It just seems a little interesting, notable to me. I don't know, some thoughts there.
Yeah. Well, I think it's different because you want it to be different, this room, because we're winning at both. You have to break this down. If you go into this industry and you just start talking about spot, without talking about contract, I think you're talking about the wrong things. We're winning in both spot and we're winning in contract. Make no mistake, when it comes to how freight moves, 75%- 80% of that freight is going to move on contract, and you have to have a relationship with that. We're strong about where we are in that relationship, and we're strong about where we are with our processes when it comes to spot. It is a balance if you want sustainable growth. That's super important that you got to have in this industry, sustainable growth. Spot alone is fleeting, as you know.
You can't just balance just one aspect. You got to have both. We've been consistent in our strategy, operate at both, and we win at both.
I'll only add a few things. We've outgrown the market in our North American Surface Transportation business for 12 consecutive quarters. You don't take that type of market share by just a singular focus on spot, right? As Dave mentioned, we're focused on healthy freight regardless. If it's contractual, if it's spot, Robinson's going to win. With our cost to serve model, we make very attractive margins in contractual. I can assure you in the spot market, we've set C. H. Robinson records on our file averages in spot. I'd say we take a little bit different look at it. We're winning in both, very profitable in both. We've said before, we think this will be a tremendous bid season for C. H. Robinson, both in volume, so more share gain, and in price. We feel good about what we're doing, right?
Certainly physics would say you can also perform better in spot if you're losing share in contractual. That's another way to look at it.
Right. In terms of the market, you've said, "Hey, we're not immune from a squeeze, but we think we'll do better than the market on squeeze, better than maybe what we've done in the past on a squeeze." I think last cycle, you guys weren't there.
No.
At the time, I think at the peak, 15% of our volumes were loss-making. How is that doing now? We didn't hear you guys talk about loss loads, but is that something that we're dealing with right now? Do you think we're at the point now where there was a squeeze in Q4, Q1? Are we starting to get unsqueezed because we're repricing business and all that sort of stuff?
Right. I'll start. Dave will jump in here. Look, Robinson is a fundamentally different company than it would've been in the last up cycle, right? The company's different, the mindset's different, the culture's different, our processes are different. We're a much more efficient company, much more focused company. Our strategy is to outgrow the end markets and expand our operating margins. We've demonstrated that now for well over two years. I would say the squeeze dynamic that we have gone through on the cost side is a great test for the squeeze dynamic you're going to go through on the demand side. I think our team has performed exceptionally well. If you think about the very small increases in Q3 that we saw, that we managed without any impact to the business. You had a more material impact in Q4 of last year. We managed that extremely well.
You take Q1, where spot costs were up close to 20% year-over-year, and we had flat margins from an AGP perspective.
Important.
We believe we're doing things at C. H. Robinson from a market share gain perspective, a revenue management perspective, that the industries just can't match, right? We know those capabilities will transfer to an up cycle in the market as well. I made this statement before, I'll make it again today, we believe our operating leverage for C. H. Robinson will rival the asset players when volume returns to this market, right? Our incremental margins are phenomenal right now, and because of the systemic way we've changed the company, that cost structure's not going to change when volume comes back to the market. Look, we always get questions, "Do you have a little anxiety about the market turning around?" The answer is no.
We're extremely excited about the market turning around because we believe you'll see an even more set of phenomenal results from C. H. Robinson than you've seen in the last 2+ years.
You made a comment where we think we'll have a really successful business. I forget the exact term, but what are you seeing from a pricing standpoint as bid season's-
We've mentioned this before. Dave's talked about it a lot, right? We believe the industry practice, we call it hatchet versus surgical, right? Where you just kind of put out these massive price increases and it takes months, if not quarters, for things to settle down in the marketplace, right? We are very surgical in how we're negotiating with our shippers. It's a continuous process, right? It goes on every day, every month, every week. With our revenue management capability, we can get very precise on what lanes need to be repriced at what percentage versus other lanes, versus just everything gets a 5%- 10% increase, right? We believe that approach will allow us to continue to gain market share while expanding margins in an up cycle.
It's disciplined, it's measured, it's part of our Lean operating model. Our customers appreciate it. I think we've demonstrated that. This is not aspirational. We just point to the results on here. When you talk about squeezes, Scott, you can argue that you've had squeezes along the way, be it road checks, storms. There are a lot of things that are pressing companies out here on the squeeze over the last year. That's a prediction of how someone's going to operate, and we feel like we've shown up pretty well on that.
Yeah.
Damon, just a numbers question on the guide, right? You've said $6 of earnings this year, and in an assumption, it's sort of zero market growth.
Yep.
Right? I know market feels a lot tighter, but we're hearing from everyone like, "It's supply-driven, it's supply-driven," right? Cass, at least to date, is still negative.
Yep.
You said, "I can't wait for volume growth. The operating leverage would be great," but it doesn't feel like we're getting a lot of market volume growth yet. If market stays negative on volume at least.
Yep
Can we still do six this year?
Yeah. Look, I'll just reaffirm. We feel really good about our $6 target that we've committed to. I will call it a target, not a guide. We don't guide. Feel good about the $6 target. To your point about negative market versus zero growth, the $6 is predicated on a zero growth market. At the end of the day, Robinson does everything we can to deliver the best result every single day, right? Even if the market is a headwind, it doesn't mean we give up on our $6 target, right? We will absolutely fight in the trenches every single day to make up any market headwind we have. Our commitment, and I'll just reiterate that commitment, is $6, no market growth. You'll get the best result that Robinson can deliver regardless of market.
Okay. Similarly, you've got a 40% sort of mid-cycle margin target for NAST, right? We just did 37% in what, a quarter where maybe there was some degree of a squeeze, right?
Yeah.
Still no volume growth, right?
We thought that was pretty good.
Yeah. I guess shouldn't there then logically be upside to 40%?
Logically, yes.
Perhaps that will happen. You need to break that down on the dynamics of that. You start talking about mid-market, we feel really good that we could exceed that. What we have told you consistently is that we're building a strategy of operating leverage. That operating leverage is once you have that built in, what do we do at that gross profit level? Do we take some of that, move it into growth and continue to do outgrowth? That is what we look at every day, and that's what we negotiate every day. We think we make the right calls with that, and we'll continue to make the right calls on that. We feel super strong about where our margins are industry leading, and they'll continue to be. I don't know.
Nope, just put a bow on that. Look, 40%'s pretty good, industry leading. We've talked about once we get north of 40%, we want the optionality to go after market share that will demonstrably improve our earnings. What we don't want to do is put ourselves in a box-
commit to a higher margin target when we don't see any reason to commit to a higher margin target, right? At some point, Robinson has not a lot left to prove on quality of earnings, right? Your answer is, can we do more than 40%? Absolutely we can. Is the likelihood that we will? Probably. Are we going to commit to it and put ourselves in a margin percentage target box above 40%? No.
Okay. This is actually a good. If there are questions, raise your hand, we'll get you involved. We'll come to you in a second. There's sort of two things I want to sort of discuss in that sort of context, right? As we maybe dive into the company specific things happening inside of CH. You guys have done 30%, maybe even more.
Correction.
45% enterprise-wide.
45% enterprise. Okay.
50% NAST, 45%-
50%
Global Forwarding.
Since the end of 2022.
Okay. 50% labor productivity, right? In NAST, right? We hear about AI, we hear about Lean. Help us understand, what's AI, what's Lean? What's an actual example of here's what Lean did, here's what AI did, right?
Yeah
at what point does that sort of tap out?
Let's frame it up.
Yeah
for you.
Right.
We get that question. I'll start with the short answer. Dave, you're asking me a serious question.
Right.
Lean versus AI, we don't think of it that way. We would say we don't know, because there's a symbiotic relationship between Lean and AI. It's our system, it's our culture, and what we're driving. That 50% productivity improvement for NAST since the end of 2022, 45% for global forwarding, that's not a period, right, for us. It's a comma, because it's part of our system and what we do. We have publicly said we are going to commit to single-digit productivity, no matter the market condition. C. H. Robinson will do that. It could be a hot market, we're going to do single-digit productivity. There are times where we will go to double-digit productivity like we are doing this year. When we have a technology advance or a process advance, we'll continue to do that.
It is a continuous improvement culture that is going to continue to advance what we're doing. We don't break them up and look at it that way. It is symbiotic in what it's doing. A good example would be, we talked about quoting, transactional quoting. That was on a Gemba walk. Gemba walk is go to the work. We're looking, and we found out that we were only addressing at 60% of our transactional quotes. Our technology, our agent at scale, our quoting agent launched. That quoting agent now hits 100% of those quotes. It gets it back in now. We cut off 1 second. It was 32 seconds, now 31 seconds, back to the customer in a conversational manner with the details that a human just didn't provide as well.
That has allowed us to get more winning percentage, allowed us to get more revenue, and it's really allowed our people to move to the right and do a lot more customer facing. That's one example of many that we have in our orchestrating agent, but that comes out of that symbiotic relationship of operating reviews, Gemba walks, really kind of driving and stressing the system of what's broken, what do we have to fix. That's why we had to put the context to it.
I'll only add, look, there is no cap on our productivity.
Yeah.
As we've mentioned before, we're in the early innings of our journey. If you look at the catalog of our processes, it's thousands of processes, tens of thousands of sub-processes. We've only automated a fraction of those processes, right? We're early in our journey, both Lean and AI. I would say, look, there's no cap on that productivity number.
It is important to say, look, we've both been doing Lean. I've been doing Lean over 30 years. It is just super early. We're driving when it comes to problem-solving all the way down to the desk. Scott, we've just got a lot to do and a lot more to go. When people say early innings, "Why do you guys say early innings? You're doing all these things." It is early innings. It's like second inning when it comes to this stuff. We know what great looks like. There's a lot more to do, and we have a lot more grass to cut.
I'm going to come to you. I think there's one, at least for me, one important thing I want to understand better.
Yeah.
You guys said effectively I think we're going to do three things, right? We're going to get a lot of productivity, right? Our model, we're going to have higher gross profit per load. We're going to have demonstrable growth, right?
Check, check and check.
Okay. Well, that's my question, right? The labor productivity, we just said 50%. Undeniable.
Yep.
That is a double check. I'll give you two checks for that one.
Thank you.
The gross profit per load is up meaningfully from the middle of 2023, right?
Yeah.
Rest of the industry is not.
One check for that one.
I'll give you a check and a half for that one.
All right. Good.
All right. Here's the real question, though, right? You've said you've gone from responding to 60% of quotes to now you respond to 100% of quotes.
Transactional quotes, yes.
Quotes. I get the industry's down, right? You're kind of flat on volume. If we're responding to 40% more quotes.
Yeah
I don't conceptually understand why volume's not, maybe it doesn't have to be up 40%. Why isn't volume up 10%, 20%, 30% if we are responding to 40% more quotes?
Well, let me do this.
The math's probably even more at 60-100, more than 40%.
Yeah, it's transactional quotes.
Right
that we're doing that.
Right
Do not take that as a 100% in-series view. Everything we've always told you from when we met is building a system that's optionality, right? When we have that ability to quote 100% of quotes that are in there, we also take the view of negotiating what volume are we going to take, right? It still has to be the right economics for us. Since we've been sitting here, we've probably denied a load at 30% margin, right? Because it doesn't fit our economics in doing that. We have the choice to be able to do that, and we control that. Before, if you have things sitting in a box, you don't get back to it for four hours, that freight's gone. That attempt to win that freight is gone. We've eliminated that. We've inserted our technology in the order-to-cash process and removed that friction.
That's what a lot of that productivity comes from. To your point, when it comes to that volume, we make that choice on what we're going to take. I would also say put that relative to the market, we're still taking share within that market. That's how you got to look at it. Cass being down, we're still outgrowing the market. You can argue that we are taking share and getting more volume on it.
I'll just add a little bit. Four-year freight recession. Cass hasn't had a positive reading.
Since 2022
since I think the second half of 2022. We've outgrown that Cass index 12 consecutive quarters. As Dave said, we take the freight we want. Any given quarter, any given month, we could take demonstrably more volume at margins that probably the industry would say, "I take that." That's not the standard at C.H. Robinson. Right now, going back to the 45% margin question. That's why we don't want a constraint on margin.
Exactly.
Once we've established that baseline on profitability at 40%, to your question on why can't you take more demonstrable volume, the answer is we will. The economics will fit the model we have going forward. Once we've demonstrated and sustained that quality of earnings that we've committed to. Make no mistake, any given month, any given quarter, we could take a demonstrable amount more share than we do. We choose not to do it.
Is it fair that in a world where market is down from volume and price, the margin profile of that incremental is harder to justify, but in a market where if the market starts growing, and certainly in a market where price starts going up.
10%, whatever, we should increasingly see the demonstrable share growth. Is that fair?
Yeah. I think when we've talked about optionality, you can equate optionality with demonstrable outgrowth, right? That's again why we've been very pointed about saying like, "Look, we won't commit to a higher margin target beyond 40% because of that exact statement." I think it is just important for this room to hear, again, any given month, any given quarter, we could have a much different volume number, a much different share number if we chose to, right?
The instrumentation is pretty instantaneous. I mean.
Yeah
Damon's point. We can turn a knob, and it's an instantaneous reaction. I mean, that is not a problem, but it's about being disciplined, measured, controlled. We own, and we know the freight that we want. It has to match our economics. The model we've built continues to mature. We're in a really, really good position to do that.
Back to where we're starting, Montgomery could help catalyze some of this.
Oh, for sure. Right?
Big opportunity.
make no mistake, if the industry consolidates, Robinson will be a winner in that consolidation. That's the organic side. We haven't got to an M&A question, but we certainly expect to be very active inorganically and be a consolidator on that side as well. When you think about the industry going forward, Robinson will be the consolidator of this industry.
We're going to come back to that in one second. I think there was a question in the back. Sorry.
Hey, guys. What do you think is your best estimate of capacity exiting the industry due to the Montgomery ruling? It's the first question. Second question.
Can I clarify that just?
Yep
we're clear? There's two things of capacity. Are you talking about broker capacity, or you're talking about carrier capacity, or both?
Both.
Okay. All right. You can go ahead.
Not a near-term thing, medium term, whatever. The second question is, you guys have said you're going to have the same operating leverage as asset-based carriers when volume turns up. What if there's no volume and it's just price driving a cycle? Kind of what we're seeing now. Would you guys still have the similar operating leverage?
Yeah. Let's answer that. Well, first of all, higher highs and higher lows. For us, it doesn't matter. Lower for longer or an inflection. We love an inflection because we're in pole position, we're going to win. If it's lower for longer, I think we've proven we'll be higher highs and higher lows, as well. When it comes to the capacity going out, listen, I can sit up here, I know just as much as you do. I'll give you an anticipation. We anticipate maybe 20%-30% of broker capacity that could come out, but we don't know for sure. The reason we would say that is because of the facts. The facts are you're going to have more insurance liability that is going to be on these brokers.
Shippers are now going to have to start looking because this particular ruling now changes the dynamic and the space of where shippers can be liable on some things. Their vetting process of brokers is going to go up, and they're going to want a broker that has the strong economics, and the strong service schedule to be able to have trust in where they move their goods. That means a lot of those kind of smaller, less scaled brokers will probably be hampered and come out of the system. That could be 20%- 30% of that. I think you'll see some small carriers as well, until there's a roll-up, you'll see some impact on carrier capacity as well. That's what I would say to that.
Yeah
part of the question.
The other question, I would say we're highly confident in the scenario you gave. Actually, we're highly confident regardless, but in the scenario you gave on the operating leverage, as we've said before, we have fundamentally changed the processes of the company, right? That quote example that Dave was going through on the transactional, if we're doing 600,000 transactional requests for quotes today, and that goes to 6 million, the technology can absorb that without any material increase in headcount, right? That's just one example. 10x increase, no increase in material cost of headcount. The second question is, remember, we don't believe we just have industry-leading productivity. We also believe we have industry-leading revenue management, which means in your scenario around price, we believe we'll optimize price better than anyone else in the industry.
We believe we are the gold standard on cost of hire discipline within the industry. In that other example, we believe revenue management capability will allow us to exceed expectations in that environment as well.
Just a quick thought. Would you think, you're already seeing gross profit per load improve, before the cycle really has kicked in at all? Do you think that means we should hit a, to use your term, with higher highs? Should we exceed prior peak, like gross profit per load this cycle?
Relative to the market, for sure, and relative to C.H. Robinson historically, yes. Certainly, take Q1, for example. Maintaining flat margins versus expanding in Q1 was, I think, quite a feat. When you consider some of the other competitors out there that demonstrated, I think one competitor demonstrated 10% year-over-year volume growth, but margins contracted 300 basis points. Gross profit dollars were actually down.
Right.
You got another competitor where they maintained a relatively consistent margin, but volume was down 20%, right? I think in that scenario, I pick what Robinson did, which was we outgrew the market, we maintained flat margins, we expanded gross profit dollars.
Damon, I want to follow up on something you said because it, at least listening to it, felt like a little bit of a change, right? I think the last time we heard you guys talk about M&A, you said there's a really high bar for M&A.
There is.
I think you just said, "We think we're going to be very active in M&A." Maybe that's, I don't know.
Yeah
that felt like a bit of a change. You know.
Yeah, I would say it's a different time, right? Because if you've listened to us the last two years.
Yeah
What we've said, Dave has said many times, is we had to earn the right to do M&A, right? We have a very high bar for M&A. We're not going to make a mistake on M&A. We had to get the company ready for an acquisition. I would argue 6 - 12 months ago, we weren't ready, right? We didn't have an industry-leading cost to serve model yet. We didn't have processes to a level of maturity yet. We didn't have a progression on the operating model in our technology to a level that we wanted to have. Now we know we have the industry-leading-best cost to serve model. We know we're ready to do M&A, and we're going to do M&A. Now, the bar is high. It doesn't mean we're going to do 10- 20 deals, right?
If you think about what kind of M&A would we do, it could run the gamut, right? Specialized, small, medium-sized player that gives us capability that we don't have today. You put the Robinson scale behind it, the ROI is incredible. It could be the acquisition of a scaled broker, right? A traditional broker that has an attractive book of business, maybe a challenged cost to serve model. We can take that book of business, put it on the Robinson cost to serve model, ultimately have a combined company that has Robinson-like margins, right? Yes, we will be active in M&A, and look, we've certainly made the statement, we'll make it again today, we're going to be the consolidator of this industry.
Again, it's not new, Scott. It's part with what we've always said. We said we're going to be disciplined and measured. Robinson's been around 120 years, have always done M&A. It's just one of those things, as Damon said. The powder's good, ratios are good, and we feel like we've got the mousetrap that's built and we think that will serve us well.
Dave, can you sort of rank for us priority between buyback, niche acquisition, sort of transformational, large scale?
Yeah. Capital allocation.
All ROI based, right? Now we think we have the capital to do all of the above. Right now, certainly, based on the magnitude of M&A, right? That can always influence pace of buyback for a period of time. Look, we believe we have the capital, we have the balance sheet, we have a fortress balance sheet, we have leverage ratios that are some of the best we've ever had. We think we can allocate capital to all those priorities in the future.
I've got time for one last question because we're already over. You want a forwarding question or an Amazon question?
Forwarding.
Yeah.
Okay. We haven't touched forwarding. Okay. There's certainly volatility right now in markets. I think, listening to others at our conference, I think the air freight market feels a little bit structurally tighter, maybe ocean market, notwithstanding some volatility, maybe structurally looser.
Just how you think about, we've had tremendous success at NAST. What's the opportunity set going forward at forwarding?
Look, we said consistently that we started with NAST. That was purposeful. We're now moving and being very purposeful in moving our technology stack into forwarding. That business alone, we already feel good on. It's improved off the back of just the operating model. Now we're going to continue to improve it by driving our technology stack. Kind of the core things we did with NAST, the order-to-cash process, removing that friction, increasing productivity, driving agility, driving speed, allowing that business to continue to punch above its weight. That's what we're in the process of doing. That's what we will continue to do. The forces that are out there when it comes to ocean, we're not immune to that. Everyone has to deal with that, and we will compete and deal with that. You're right about air.
We're doing that, and that's a little bit different takt time on doing that, and we're competing really well in that business. We're pretty excited. He and I have always said, next two years at Robinson, I'm telling you, man, they are much more exciting than the last two, and the last two have been pretty damn exciting. We feel really good about it.
All right. That's a good place to wrap. Dave, Damon, thanks so much. That was great.
Thank you.
Yeah. Absolutely. Thanks. Good job.