Company Reports

As anticipated, the International Longshoremen’s Association has implemented a work stoppage across US East Coast and Gulf Coast ports. As we understand it, the dockworkers union initially wanted a more than 70% increase in wages over a six-year period in order to return to the negotiating table. Before the strike, it sounded to us as if the Biden administration was signaling hesitancy to intervene via the Taft-Hartley Act. Thus, the potential duration of the strike remains uncertain.

Expeditors International's second-quarter gross revenue flipped positive for the first time in more than a year, rising 9% year over year. Revenue came in modestly ahead of our forecast on stronger-than-expected airfreight tonnage. On the other hand, net revenue (gross revenue less capacity costs) fell and missed our forecast due to gross profit margin pressure from spiking buy rates for capacity. Net operating margin (EBIT/net-revenue) was slightly below our expected run rate, but not drastically. We are raising our DCF-derived fair value estimate to $109, from $107, due to the time value of money since our last update. The shares are fairly valued relative to our longer-term free cash flow growth forecasts.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the industry. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes over the past decade. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generated excellent returns on capital of almost 40% over the past decade, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International's first-quarter gross revenue fell 15% year over year, though this was better than the 46% decline posted for full-year 2023. Revenue came in modestly shy of our forecast, but we continue to look for sequential improvement in the second half on modestly better demand from retail end markets. Recall that pricing across the air and ocean industry has been facing excess carrier capacity, while demand has grappled with the postpandemic pullback in retail sector inventory restocking, not to mention a sluggish industrial sector.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the industry. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes over the past decade. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generated excellent returns on capital of almost 40% over the past decade, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the industry. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes over the past decade. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generated excellent returns on capital near 40% over the past decade, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International's fourth-quarter gross revenue fell 34% year over year, though this was better than the 50% decline posted last quarter. Revenue came in modestly shy of our forecast on lower-than-anticipated ocean and customs brokerage revenue.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the industry. The firm operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes over the past decade. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates excellent returns on capital in excess of 40% over the past decade, with help from its wide economic moat, which is rooted in the network effect.

In the third quarter, Expeditors International's gross revenue fell 50% year over year, similar to the second-quarter decline. Revenue came in shy of our forecast, albeit not drastically. It's been tough to spot a trough amid the industry's heavy normalization phase. Recall revenue flipped negative in fourth-quarter 2022 following a few years of meteoric growth in both volume and pricing (sell rates) to shippers.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the pack. The firm operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates impressive returns on capital, with help from its wide economic moat, which is rooted in the network effect.

In the second quarter, Expeditors International's gross revenue plunged 51% year over year. Revenue once again fell short of our expected run rate as it's been tough to pin down a bottom given the industry is navigating such a heavy normalization phase. Recall revenue flipped negative in the fourth quarter following a few years of meteoric growth in both volume and pricing (sell rates) to shippers.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the pack. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates impressive returns on capital, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the pack. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates impressive returns on capital, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International's gross revenue plummeted 44% year over year in the first quarter, short of our expected run rate, though we still think conditions will begin stabilizing in the back half. Recall revenue flipped negative in the fourth quarter following a few years of exceptionally strong volume and pricing growth. We don't expect to materially alter our DCF-derived $104 fair value estimate. The shares are trading in fairly valued territory relative to our longer-term revenue, margin, and free cash flow growth forecasts.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the pack. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates impressive returns on capital, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International ranks among the top 10 global freight forwarders in a highly fragmented industry, and its record of impressive financial performance leads the pack. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates impressive returns on capital, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International's gross revenue trend flipped negative, plummeting 36% year over year in the fourth quarter, well short of our expected run rate. This follows a 37% increase on average in the first half and staggering 72% jump in 2021. We’ve been expecting a material slowdown especially heading into 2023, but conditions deteriorated faster than we anticipated in the quarter. In short, air and ocean freight demand and pricing are retrenching off historic pandemic-driven highs seen throughout 2021 and into early 2022, especially given the pullback in retail sector inventory restocking and dissipating transportation supply chain constraints.

Expeditors International ranks among the top 10 global freight forwarders in a fragmented industry, and its record of impressive financial performance leads the pack. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates impressive returns on capital, with help from its wide economic moat, which is rooted in the network effect.

Expeditors International's third-quarter gross revenue growth moderated materially to roughly 1% year over year, compared with a 37% increase on average in the first half and 72% for all of 2021. Revenue came in ahead of our expected run rate, likely due to fuel surcharge noise. Overall, stalling growth is not a surprise (even amid the peak season) as we've been expecting the air and ocean forwarding landscape to see more meaningful core-pricing normalization in the second half off pandemic-driven highs, due in part to diminishing carrier-capacity constraints. Recall air and ocean volumes have already been falling in recent quarters on easing retail sector inventory restocking and softening international export activity.

Expeditors International ranks among the top 10 global freight forwarders in a fragmented industry, and its record of impressive financial performance leads the pack. The company operates more than 250 offices on six continents, with a core focus on Asia-North America trade lanes, though it's also been gradually expanding its presence on key intra-China and European freight lanes. As a global forwarder, the company contracts with airlines and ocean carriers for cargo space then fills that capacity with customers' freight. A large customs brokerage operation (including warehousing and distribution services) complements air and ocean services, along with multimodal and final-mile delivery services in North America (Transcon). Expeditors' asset-light model generates impressive returns on capital, with help from its wide economic moat, which is rooted in the network effect.