Expeditors airfreight revenue falls 51% YoY

Expeditors revenue in the third quarter of 2023 fell 50% year over year to $2.2 billion. Airfreight revenue in Q3 fell 51.1% YoY to $724.3 million. [caption id="attachment_98641" align="alignright" width="300"] (Photo/Expeditors)[/caption] THE BIG PICTURE: Like others in the air cargo industry , Expeditors was hampered in Q3 by high capacity and low demand, which drove down rates. “As expected, the deceleration in demand that we have seen since the second half of 2022 continued in the comparable third quarter of 2023,” Expeditors President and Chief Executive Jeffrey S. Musser said in today’s earnings release. BY THE NUMBERS: Airfreight tonnage in Q3 declined 14% YoY and ocean freight tonnage fell 15% YoY. Still, airfreight tonnage improved slightly at the end of the quarter: July and August each saw 15% YoY reductions in tonnage, while September saw a 12% YoY reduction. Expeditors also reported for Q3: Diluted net earnings attributable to shareholders per share decreased 54% YoY to $1.16; Net earnings attributable to shareholders decreased 59% YoY to $171 million; and Operating income decreased 59% to $216 million. WHAT THEY’RE SAYING: Q3 figures reflect the market normalizing from increased demand and volumes during the pandemic, Musser said. “Air and ocean capacity is now mostly plentiful and at rates that remain well below the pandemic period,” Musser said. “We have also experienced declines in the number of customs brokerage transactions we handled, even as we benefited from lower costs resulting from the gradual clearing of pandemic-related port congestion. “We have seen shippers generally move smaller volumes in a marketplace that is defined by inflation, high energy costs, an increasingly tentative consumer, and now significant and growing geopolitical uncertainty,” he said. STATE OF PLAY: Expeditors executives were encouraged to see improved volumes from Q2, marking the first sequential quarterly growth in volume since Q3 2022, according to Chief Financial Officer Bradley S. Powell . Still, the company is focused on reducing expenses, he said. “So long as the economic environment remains uncertain , we will continue to focus on aligning headcount and overhead expenses commensurate with our transactions and volumes,” Powell said in the earnings release. Since Dec. 31, Expeditors has decreased headcount by 8%, according to Powell, and, as of Sept. 30, had 18,625 employees, according to the earnings statement. “We also continue to be very mindful of our strong cash position, having now returned more than $2 billion to shareholders in repurchased stock and dividends over the past 12 months,” Powell said. FLASHBACK: Expeditors ranked fifth on Air Cargo Next ’s Power 25 list of top freight forwarders, which was based on 2022 tonnage. Expeditors ranked fifth the year before, as well. FUTURE LOOK: Musser called this post-pandemic normalization period “unpredictable and disruptive.” “We are meeting these conditions head-on and have been rebalancing operations for an environment that is now more like the way things were prior to the COVID disruptions,” Musser said. “We do not know how long this cycle of cautious demand and soft rates will last in this uncertain economic environment. “While not all markets are soft and rates have even increased in certain lanes, we have yet to see signs of a widespread improvement in rates,” he said. “Nevertheless, we are encouraged by indications that tonnage and volumes are perhaps flattening or improving. “While we continue to adjust for the current environment, we also need to be prepared for the longer term when pricing and capacity conditions stabilize and demand begins to consistently trend higher.” MARKET REACTION: Shares of Expeditors (NASDAQ: EXPD) w ere down 0.98% from market open to $110.40 as of market close today. The company has a market capitalization of $16.3 billion.

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