Analyst Note| Matthew Young, CFA |
Wide-moat Expeditors International’s second-quarter gross revenue jumped 50% year over year, above our expected run rate, as air and ocean activity continued to surge. Strong growth stemmed in part from an easy comparison (initial pandemic disruption), but underlying demand remained unusually robust thanks to the pandemic-driven spike in consumer goods spending and heavy retailer restocking (in the United States and Europe), which is supporting unusually strong imports from the Asia-Pacific region. Airfreight tonnage rose 37% year over year (33% in the first half), while ocean freight was up 34% (32% in the first half). At the same time, sell rates to shippers for airfreight (especially out of North Asia) have spiked on constrained capacity linked to robust demand and limited belly space availability among commercial airlines. Sell rates on ocean freight also jumped due to carrier capacity imbalances and heavy West Coast port congestion.