Strong quarter for Expeditors as disruptions and uncertainty led to a volume increase

Expeditors International had a strong fourth quarter across the board, with both revenue and profits beating analyst estimates.

Revenue of $2.95 billion was up 30% from the corresponding quarter of 2023. Operating income was up 51% and net earnings rose 49%. Both figures topped analysts’ projections, according to SeekingAlpha, with the GAAP earnings per share of $2.68 beating consensus forecasts by 24 cents a share and revenue topping forecasts by $190 million.

Expeditors (NASDAQ: EXPD) is a 3PL that purchases and resells oceangoing and air capacity. It does not conduct an earnings call with analysts.

In the earnings statement, CEO and President Jeffrey Musser cited several reasons for the strong performance. He said Expeditors had “moved more air tonnage than we have since Q4 2021. Strong demand out of Asia drove rate increases and segment growth in both the quarter and during the second half of 2024.”

Expeditors does not break down the overall increase in tonnage year on year with specific numbers. For the quarter, airfreight volumes measured in kilograms were up 11% year over year, and ocean freight measured in forty-foot equivalent units rose 14%. November was particularly strong for ocean volume at Expeditors, rising 18%.

As a company heavily involved in cross-ocean commerce via ship and air, Expeditors saw “disruption-driven ocean demand” that both increased rates and tightened capacity, spurring growth, Musser said.

The disruptions he cited include the diversions away from the Red Sea. That was a positive for Expeditors.

“Strong demand generally for ocean transportation combined with longer transit times and capacity issues caused by the disruptions in the Red Sea resulted in significant increases in overall average buy and sell rates and growth in volumes,” Musser said in the company’s prepared statement. 

Given what Expeditors does, it’s at the center of whatever changes may occur in international trade as tariff wars intensify. But Musser said Expeditors has “limited visibility going forward.”

“It is extremely difficult to predict the impact to global air supply and demand that may result from actions such as the anticipated U.S. elimination of certain de minimis exemptions,” he said, a reference to the trade policy, now under fire, that blocks any sort of duty payments for shipments under $800 in value. “Geopolitical words and action are driving disruption at a faster pace than we can ever recall, and national policies regarding tariffs and other similar measures are highly unclear in many countries around the globe.”

But Musser boasted that Expeditors is “at our finest during chaotic times like these.”

That chaos, however, might have been a reason for the lackluster performance of Expeditors stock. In the past three months, it is down approximately 5%, and it is down about 7.9% in the past year. But it is up about 3.6% in the past month.

Market reaction to the stronger-than-expected earnings was muted. Expeditors stock soon after the market opened on Tuesday was up about 0.25%. 

Unlike many 3PLs that have been cutting jobs, Expeditors at the end of the fourth quarter had more employees than a year earlier, rising to 18,917 from 18,452. 

In the company’s earnings statement, CFO Gregory Powell said that “given the growth in air and ocean shipments, increased customs declarations and other business activity, we carefully added headcount in certain important areas during the quarter.”

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