The news that Expeditors International of Washington had suffered a cyber-attack that had led to the shutting down of much of its operating systems has detracted from the report of its annual results.
The attack, which appears to have started over the weekend of 19th-20th February, has, in the words of the company “limited” its ability to do business. On Wednesday 23rd the company stated that it “continues to operate within our global business continuity plan. We appreciate the overwhelming support from our customers, employees, service providers and key stakeholders. Our employees are focused on deploying backup procedures and solutions during this time. Our cybersecurity and technology teams and partners are diligently working on the evolving situation.”
The timing is more than unfortunate for Expeditors as it obscures the success that it has been experiencing over the past year. Its latest results released on Tuesday 22nd show a company that had increased its full year revenue by 81% to US$16.523bn and its net earnings by 102% to $1.4bn. It is worth noting that “directly related cost of transportation and other expenses” rose 81%. This is despite ocean freight volumes declining by 4%, although airfreight tonnage increased by 13% which presumably reflects Expeditors’ success in air charters.
Of course, what Expeditors have been exploiting so effectively is extraordinary market conditions. Jeffrey Musser, Expeditors’ CEO observed that the conditions that led to these remarkable results were “too little international air capacity… the ocean ports are too congested to accommodate many of the ships that need to load and unload their containers; and worker shortages are severely limiting overland capacity to support the freight that is able to arrive in port.”
The condition of Expeditors is therefore uncertain. On the one hand it is faced with the major short-term problem of the collapse of its IT. This should not be terminal for the company as many others have demonstrated before, cyber attacks can be managed and recovered from. In medium-term however, Expeditors will have to respond to markets which will return to something resembling normality. Like all other major LSPs it will need to develop a strategy for this that sustains at least some of its new found profitability. The cyber attack will be a distraction from this.
Source: Transport Intelligence, 24th February 2022
Author: Thomas Cullen