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Here's Why C.H. Robinson Intends to Invest $1B in Technology

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In a bid to offset competition from the digital startups and fortify its position in the third-party logistics industry, C.H. Robinson Worldwide (CHRW - Free Report) intends to double its investments toward technological advancements. The Eden Prairie, MN-based company’s CEO, Bob Biesterfeld, announced that C.H. Robinson, which invested $1 billion toward technology in the past decade, aims to spend a similar amount over the next five years.

Notably, this transportation company will direct its spending on technologies mainly in the fields of artificial intelligence, machine learning and predictive analytics. Bulk of the amount will be spent toward the development of innovative solutions and introduction of products.  However, in order to develop such innovative products, it is necessary to have people with the requisite technological expertise.

Keeping this in mind, C.H. Robinson, which currently boasts 1,000 data scientists, engineers and developers, intends to invest a portion of the $1 billion amount in hiring new talents.

Significant Competition in the Digital Freight-Booking Space

We believe that Biesterfeld’s announcement to up the ante, as far as its plans pertaining to technology investments are concerned, is also aimed at offsetting intense competition in the fast-growing Digital Freight-Brokerage market.

The promising market, which includes startups like Convoy, Transfix and Uber Technologies’ (UBER - Free Report) freight unit, is expected to be valued at approximately $21,355.49 million by 2026 compared with $836.06 million in 2017 (CAGR of more than 43% in the 2018-2026 period). These startups are looking to enhance connectivity between truckers and shippers through increased usage of technically advanced apps.

Apart from C.H. Robinson, which has a Zacks Rank #4 (Sell), fellow logistics players like XPO Logistics (XPO - Free Report) and J.B. Hunt Transport Services (JBHT - Free Report) are also spending significantly toward automating and digitizing their brokerage operations. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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