Expeditors loses momentum in Q1 2016

First-quarter net revenues dropped 2 percent, year-over-year, at Seattle-based Expeditors, to US $517 million, while net profit fell 9.6 percent, year-over-year, to $97 million as the company adjusts to marketthat looks very different from the boom days if Q1 2015.

Company president and CEO Jeffrey S. Musser noted the stark differences in “the underlying fundamentals” driving business in Q1 2015 versus Q1 2016. Last year’s U.S. West Coast port disruptions provided a significant boost to the company’s airfreight division, while this year Expeditors had to deal with overcapacity, falling rates and headwinds from lower global trade activity.

Airfreight tonnage fell 9 percent during the first quarter of 2016, which translated into an 11.5 percent decrease to the net revenues attributable to the airfreight services division, which dropped to $172.08 million.

Despite falling rates, net revenue yields were well ahead of Q1 2015 at 36.5 percent. Chief financial officer Bradley Powell attributed the swelling yields to “favorable market buying opportunities” arising from overcapacity. This upward trajectory on yields, however, is likely to face uncertainty moving forward as cautious shippers seek out cheaper rates.

Moving into the second quarter of 2016, the impact of West Coast port disruptions will begin to drop out of annual comparisons with 2015, and with no foreseeable tailwinds pushing global trade volumes, rate volatility is likely to persist, added Powell. These factors, Powell hinted, could make for dismal comparisons for the remainder of the year.