The flurry of court cases surrounding Expeditors has not put it off its stride: in its Q1 results it announced healthy growth, with strong volume and revenue increases.
However, it warned that the market was now unpredictable, due to the “frenzied landscape of tariffs”.
Reporting a 21% year-on-year increase in revenue, to $2.7bn, on air tonnage up 9% and ocean up 8%, new CEO Daniel Wall said the company continued to “pull the right levers”.
He added: “We grew air tonnage and ocean volumes year over year, as all our teams across our global network performed their best in a very difficult market.”
Thanking the brokerage team for the additional work brought by “the frenzied landscape of tariffs, threats of tariffs, shifting geopolitics, and other disruptions”, he added: “While we often have performed well when the marketplace is most unpredictable, I am not sure any of us have ever seen anything like the non-stop, rapidly shifting rules and regulations that have impacted our industry in recent days.”
As with many companies, front-loading brought in good results for Q1.
“Compared with a year ago, airfreight increased on higher buy and sell rates and growth in tonnage from strong demand, primarily in technology, as importers front-loaded shipments in anticipation of higher trade tariffs. Air capacity remained tight, due to ecommerce export demand from North Asia and ongoing re-sourcing to South Asia and India.”
Airfreight revenue rose nearly 19% year on year, to $901.7m, but airfreight expenses rose 20%, to $648m.
In ocean, revenue rose 37%, to $781.6m, with expenses up 38%, to $574m.
“Our ocean business favourably compares with the first quarter a year ago, and grew in strength on higher volumes and rates, as importers also front-loaded shipments, as well as extended transit times because of the continuing conflict in the Red Sea,” said Mr Wall.
And its ocean volume growth was better than that of its rivals, said DSV, at 3%.
Customs brokerage and other services revenue was up 12%. to $983m, with expenses up 15%, to $554m.
“Our customs and other businesses increased on growth in customs clearances and additional ancillary services from increased shipments, as well as increased road freight volumes, and growth in new business in warehousing and distribution, principally in North America,” said the firm.
But change is in the air.
“The short- and longer-term future is as unpredictable to us as it is to everyone,” said Mr Wall. “While we expect air capacity and rates to remain volatile, it is too early to predict what impact an end to the de minimis exemption may have on air capacity and rates, as there are other economic and geopolitical unknowns to consider.
“Subsequent to 31 March, we are seeing early signs that China-to-US ocean volumes are declining significantly. While some of those volumes are shifting to other lanes, as customers look to mitigate their exposure to China-specific tariffs, it is too early to know what the overall decline in volumes might be.
“Speculation regarding additional tariffs may cause more customers to pause, or cancel shipments entirely. While carriers have shown a willingness to manage capacity, the current environment is so unsettled, they simply may not be able to do enough to keep rates from continuing to fall if consumer resilience fades and the capacity/demand imbalance becomes significant in certain lanes.
“We believe uncertainty is likely to continue for some time, with possibly significant impacts to our industry.
“We also remain optimistic that trade will continue to flow, and we will work closely with our customers to find solutions to keep their cargo moving.”
Expeditors famously boasts that it does not make redundancies, but it is facing court cases suggesting otherwise. However, in Q1 it boosted staff numbers “to support growth in business activity, primarily in operations and sales, as well as our critical information systems”, said CFO Bradley Powell.
“But we were, again, careful not to increase headcount ahead of our ability to grow tonnage and volumes and increase profitability, growing pre-tax operating income by 24% from a year ago. Our measure of operating efficiency (operating income as a percentage of revenue less directly related cost of transportation and other expenses) was in line with our 30% target.”
Net earnings grew some 20%, to $204m.
Mr Powell added that Expeditors, which had been hard hit by a cyber-attack in 2022, was investing in technology and cybersecurity, after generating $343m in cash from operations. It had also spent $177m on stock repurchases, he said.
Meanwhile, Expeditors has faced various court cases from sacked employees. But it is also fighting back against a campaign which it says amounts to harassment. Last month, it filed a case against an unnamed defendant, who it claimed had sent “repeated and anonymous emails concerning and harassing Expeditors to hundreds of persons and entities, including Expeditors’ customers and potential customers, Expeditor’s employees and family members, and major media organisations”.
The “false representations” in the emails questioned management practices, hiring and retention policies, customer billings and accounting practices.
Calling for a trial, Expeditors claimed: “Defendant knew and knows the statements are false and would create a false impression and harm to Expeditors. As a result, defendant has caused Expeditors damage to its business and reputation in an amount to be proved at trial.”
