News / Expeditors 'adapted well in an erratic quarter' – but earnings disappoint

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Expeditors’ Q2 results will have left investors disappointed, with softer-than-expected earnings and a “still-heavy” cost base, but revenues remain solid.  

Year on year, the forwarder’s revenues increased 9%, to $2.4bn, but operating income fell 10%, to $224m.  

President and CEO Jeffery Musser said it had been “another erratic quarter” for the industry, but Expeditors had “continued to adapt well”.  

He highlighted disruption, such as rapid changes and imbalances in buy versus sell rates, particularly on Asian exports, e-commerce demand and ocean re-routings due to the Red Sea crisis.  

Q2 airfreight tonnage increased 15% year on year, and was up 10% on the previous quarter. Revenues from airfreight services in H1 were reported at $1.61bn versus $1.66bn in H1 last year. 

“Buy rates outpaced increased sell rates, as international direct e-commerce demand from North Asia outweighed increased carrier capacity to accommodate this growth in demand. The air markets have further been impacted by manufacturing relocations,” explained Mr Musser. 

Meanwhile, with second-quarter ocean container volumes showing a decrease of 3%, YoY, Mr Musser said: “Longer sailings due to insecurity on the Red Sea have largely lessened the benefits of any increased ocean capacity brought on this quarter. Even though ocean volumes increased for a second sequential quarter, buy rate increases outpaced higher sell rates.” 

CFO Bradley Powell added: “Expenses are still high compared with our 30% efficiency target, compensation being our largest and most variable operating expense.” 

Diluted net earnings attributable to shareholders per share (EPS) decreased 5%, to $1.24, from Q2 23. 

The Loadstar Premium’s DeskOne commented: “Soft earnings and a still-heavy cost base, chiefly headcount, do not please investors.”  

Mr Powell noted that Expeditors had “reduced headcount by 7%”, largely through attrition, but increased staff in its information systems segment. The number of full-time employees across the company has reduced to 18,403, from last year’s total of 19,681.  

“Our ability to see much beyond our day-to-day levels of activity remains challenging,” concluded Mr Musser. “There is much uncertainty with regard to demand, capacity and pricing, not to mention unpredictable events with the potential to impact global shipping for days, weeks, or even longer.”