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Expeditors International of Washington Inc EXPD

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Q2 Air and Ocean Forwarding Backdrop Highly Volatile, but Expeditors Continues to Thrive

Matthew Young, CFA Equity Analyst

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.

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Company Profile

Business Description

Expeditors International of Washington is a non-asset-based third-party logistics provider, mainly focused on international freight forwarding. It employs sophisticated IT systems and contracts with airlines and ocean carriers to move customers' freight across the globe. The firm operates more than 200 full-service office locations worldwide, in addition to numerous satellite locations. In 2020, Expeditors derived 38% of consolidated net revenue from airfreight, 20% from ocean freight, and 7% from customs brokerage and other services.

1015 Third Avenue
Seattle, WA, 98104
T +1 206 674-3400
Sector Industrials
Industry Integrated Freight & Logistics
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 17,480