Expeditors flies high!

US-based forwarder and logistics services provider Expeditors International reported fourth-quarter net income up 51.2% y-o-y to $168 million, as net revenue increased 14.6% to $629 million. Operating income for the quarter was up 15.6% to $199 million.

At first glance, the more than 50% increase in profit looks odd, but the quarter’s net income included a $39 million net income tax benefit from the effect of the 2017 Tax Cut and Jobs Act – absent this one-time benefit, net income would have been up 16.2%.

All three of the company’s business units performed well.

• Air freight volume in the quarter was up 6%, and this, combined with the high-demand/tight-capacity environment that allowed airlines to dramatically increase prices, drove a 24.0% increase in Expeditors’ gross air freight revenue to $854 million. But while such rapidly rising prices might be expected to put a dent in a forwarder’s net revenue, that was not the case for Expeditors, as fourth quarter net revenue from air freight activities jumped 25.9% to $218 million. Air freight operating margin in the quarter was 25.5%.

• Ocean freight volume was up just 1%, and gross revenue from ocean freight forwarding rose only 3.6% in the quarter to $521 million, but again, the increase in net revenue, up 7.2% to $141 million, was strong. Ocean freight operating margin was 27.0%.

• Customs brokerage has long been Expeditors’ most profitable division, and the fourth quarter of 2017 was no exception. Gross revenue was up 16.8% to $526 million, and net revenue rose 10.6% to $270 million. Operating margin from customs brokerage and related activities in the quarter was 51.4%.

Overall, despite difficult conditions, Expeditors reported a fourth-quarter operating margin of 31.6%, and a net margin of 26.7% — flying high, indeed.