Expeditors & CH Robinson proxy filings – always worth a look
It’s that time of year…
Expeditors has had a challenging first quarter, which it blamed on current economic headwinds.
But even with weak global trade, the US forwarder appeared to have a tougher time than its competitors in the first quarter of the year.
Expeditors doesn’t open itself up to immediate interrogation from analysts in the same way that other listed companies do, but did comment that, given the challenges of Q1, it was “pleased with how things turned out”.
Revenues fell 15% to $1.4bn – an unpleasant comparison with, for example, CH Robinson, where turnover was down 7% to $3bn. Operating income at Seattle-based Expeditors fell 10% to $151m, while CH Robinson saw net income rise 11.7% to $119m.
Another rival, Panalpina, whose profit fell 11% to $17.8m, makes a better headline comparison with Expeditors: its revenue was also down 15%, to $1.3bn.
Chief executive Jeffrey Musser said: “We knew that comparing our 2016 results with our record year in 2015 would be challenging, especially when considering the current headwinds from slowing global trade. The business drivers in Q1 15 were quite different from those in Q1 16.
“In Q1 15, we delivered solutions to customers who navigated around and through issues in the US west coast ports, and this year we worked with carriers to adjust pricing in oversupplied air and ocean markets to maintain and grow profitable market share.”
But Expeditors doesn’t appear to have successfully won much profitable market share. Its air freight volumes fell 9%, while CH Robinson saw volumes rise 15% and Panalpina’s were up 5%. And air freight revenue, at $560m, was down twice as much at Expeditors as at its competitors.
Volumes in sea freight only fell 3%, but revenue plummeted 19% to $454m. (CH Robinson saw ocean volumes up 8% and net revenue up 17% to $58m. Panalpina saw EBIT flat on a 10% fall in ocean volumes.)
Expeditors, which is known for efficiency and customer service, suffered year-on-year declines in all regions during the quarter.
“Our people performed very well as we adapted to a rapidly changing marketplace affected by slowing global trade and excess carrier capacity,” said Bradley Powell, CFO.
“Similar to our Q4 2015 results, net revenue yields and cash flow from operations in Q1 2016 are among our best. Many of our customers are being cautious about how to spend their logistics dollar, taking advantage of abundant capacity in search of lower rates where possible, and we are aligning ourselves to address their needs.
“While volumes and average sell rates in air and ocean were lower compared with both Q1 and Q4 2015, we continued to benefit from available ocean and air carrier capacity and favourable market buying opportunities.”
He added that with continuing rate volatility and economic uncertainty, Expeditors’ full-year results also might not look so good. Or in his words: “May continue to impact the comparisons.”
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