After several years of uncertain progress, Expeditors has had a solid year with significant increases in revenue and profits. For the twelve months to December 31, 2017, the freight forwarder saw revenues rise 13%, though net revenue (revenues less directly related operating expenses; what many other forwarders call gross profit) was up only 7%. Operating income was 4% higher at US$670m.
As for volumes, container traffic measured in TEUs was just 1% higher in Q4 year-on-year, while airfreight fared better with 6% tonnage growth. Full year numbers were not disclosed.
Airfreight drove the business forward over the past 12 months, with revenues up 17% to US$2.8bn. Sea freight revenues were up just under 10% at $2.1bn, while customs brokerage did well with a 12% rise in sales. However air and sea freight expenses also rose vigorously, with the former for example, rising by 21% year-on-year.
Expeditors’ key markets of North Asia and North America saw increasing levels of operating profit however problems arose in more peripheral areas such as Latin America, South Asia and Middle East, Africa and India. Profits fell in all of these regions, although it is unclear why.
Although volume growth slowed towards the end of the year, Q4 saw a distinct rise in profitability, with operating profits up 16% in parallel with revenue and 1 percentage point higher than net revenue. Air and ocean net revenues were up by a colossal 26% and 22% respectively in Q4, suggesting Expeditors cashed in amid a tight capacity environment.
Jeffrey Musser, President and Chief Executive Officer, stated, “the global freight industry is stronger than it was a year ago, particularly in certain key lanes and especially for shipments by air. In response to that continued robust demand, and combined with tight capacity and unpredictable rates, we continued to grow profitably”.
Source: Transport Intelligence, February 22, 2018
Author: Thomas Cullen
