Speaking of a 51% y-o-y growth in Q4 operating income to $301.1m, US global freight forwarders Expeditors International’s CEO said, “Turbulent conditions such as these are when Expeditors tends to perform at its best.” Revenues in the quarter were up 29.7% to $2,954.7m.
Where the Q4 operating income margin was up 1.4 basis points y-o-y to 10.2%, over the year this fell 0.3 basis points to 9.8%, as operating income grew 10.8% to $1,041.3m and revenue grew 14.0% to $10,600.5m. Across the company’s operations in the full year:
– Air freight forwarding revenues grew 13.0% y-o-y to $3,669.7m
– Ocean freight forwarding revenues grew 33.2% y-o-y to $3,148.5m
– Customs services grew 2.5% y-o-y to $3,782.3m
Geopolitical disruptions improve ocean business
According to Expeditors CEO Jeffrey S Musser, a number of factors hit global ocean freight capacity and this in turn improved the rates that the company could take for its cargoes. He said, “Disruption-driven ocean demand led to significantly increased rates and strained capacity, leading to increased year on year growth.”
High on this list of disruptions was the Red Sea situation. Musser continued, “Strong demand generally for ocean transportation combined with longer transit times and capacity issues caused by the disruptions in the Red Sea resulted in significant increases in overall average buy and sell rates and growth in volumes.”
To add to this was the North America ports organised labour disruptions. Musser added, “Capacity was partially hampered by front-loading, as shippers scrambled to limit disruptions from potential port labour actions.”
De minimis a boon to Expeditors air freight
Asian online discounters impacted air freight capacity in 2024, and this helped air freight rates. Musser said, “Strong demand from Asia, along with de minimis-driven e-commerce business and increased demand for technology products, limited access to air capacity.” Consequently in 2024, “We moved more air tonnage than we have since Q1 2021.”
Customs brokerage benefitted from air and sea capacity tightness
Expeditors’ customs brokerage business saw a small but noticeable benefit from the tight air and sea markets. Musser pointed out, “Growth in air and sea shipments helped drive an increase in fees for customs declarations and services.”
Geopolitics moving too fast for a clear view on 2025
Generally speaking, businesses like a slow moving, clear environment in which to operate. This does not seem to be the case by any means in the eyes of the Expeditors chief executive. Looking forward, Musser said, “We continue to have limited visibility going forward.” Referring to the elimination of many US and European de minimis exemptions and the possibility of peace in the Red Sea, he continued, “Geopolitical words and actions are driving disruption at a faster pace than we can ever recall, and national policies regarding tariffs and other similar measures are highly unclear in many countries around the globe.”
Even so, the company has signalled some confidence in the future by growing its workforce. That might well be due to the ongoing global disruption to supply chains being an opportunity for the company as opposed to a headwind as Musser indicated.
Author: Richard Shrubb
Source: Ti Insight
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