Airfreight tonnage the bright spot in Expeditors’ Q216 results

The strength of Seattle-based Expeditors International’s airfreight unit helped balance out the mediocre performance of its oceanfreight business, though not enough to prevent net profits from falling 1.6 percent, year-over-year, to US$116 million. Although gross revenues were down 12.8 percent to $1.48 billion, net revenues, which is a more meaningful measure of what a forwarder is earning after carriage expenses, were nearly flat, up just 0.2 percent to $553 million.

Expeditors reported a 9 percent surge in the airfreight tonnage it handled in June, following a stint of lower growth in April and May. Increased volumes, however, do not necessitate consistent margins. First-quarter airfreight volumes were up 2 percent, even as airfreight net revenues fell 4.4 percent, to $179 million. Seafreight, on the other hand, saw a 1 percent contraction in TEUs and a similar 1.7 percent drop in net revenues, which fell to $141 million.

Despite the drop in net revenues, income as a percentage of net revenues continued to provide yields greater than 30 percent, which has been customary of Expeditors’ performance in recent years. Chief financial officer Bradley Powell credited the persistently high yields to Expeditors’ ability to “take advantage of available capacity and rates in all parts of [its] business.”

Company president and CEO, Jeffrey S. Musser, said, “the global economic environment remains uncertain, particularly in Europe, and trade continues to slow. Despite these conditions, we continue to gain new customers and expand our market share.”

Musser said the company’s strategic plan will focus heavily on China and North America for future “profitable growth.”