US forwarders Expeditors International reported strong growth in earnings and revenue despite the chaos in regulations that came from the US government in the quarter. CEO Daniel Wall commented on the quarter, “I especially want to thank our brokerage teams for maximising their efforts and all of their additional work to address the frenzied landscape of tariffs, threats of tariffs, shifting geopolitics, and other disruptions that have had shippers around the world rapidly re-evaluating the risks to their supply chains. While we often have performed well when the marketplace is most unpredictable, I am not sure any of us have ever seen anything like the non-stop, rapidly shifting rules and regulations that have impacted our industry in recent days.”
Overall operating income grew by 23.8% y-o-y to $265.9m on revenues that improved by 20.8% to $2,666.4m in the quarter. Within this, Ocean reported a 36.9% y-o-y revenue growth to $781.7m. Wall said, “Our ocean business favourably compares to the first quarter a year ago and grew in strength on higher volumes and rates as importers also front-loaded shipments, as well as extended transit times because of the continuing conflict in the Red Sea.”
The air forwarding business also did well with revenues up 18.8% y-o-y to $901.8m. Wall continued, “Compared to a year ago, airfreight increased on higher buy and sell rates and growth in tonnage from strong demand, primarily in technology, as importers front-loaded shipments in anticipation of higher trade tariffs. Air capacity remained tight due to e‑commerce export demand from North Asia and ongoing re-sourcing to South Asia and India.”
Ocean to air?
UPS CEO Carol Tomé recently said that she predicts more freight volumes to go by sea than air, but even with the stronger revenue growth of ocean than air in the most recent quarter, Wall seems to disagree. Looking forward, he said, “Subsequent to March 31, 2025, we are seeing early signs that China to U.S. ocean volumes are declining significantly. While some of those volumes are shifting to other lanes, as customers look to mitigate their exposure to China-specific tariffs, it is too early to know what the overall decline in volumes might be.”
As we stated in the UPS article, the only certainty is uncertainty for the moment, and of this, Wall doesn’t disagree: “Speculation regarding additional tariffs may cause more customers to pause or cancel shipments entirely. While carriers have shown a willingness to manage capacity, the current environment is so unsettled that they simply may not be able to do enough to keep rates from continuing to fall if consumer resilience fades and the capacity/demand imbalance becomes significant in certain lanes. We believe that uncertainty is likely to continue for some time, with possibly significant impacts to our industry.”
With the chaos that reigns over US trade relations with the rest of the world, no one can see a clear line to which to take. This is not good for any business as all require some sort of certainty in which to make strategic and tactical decisions. It seems that at a tactical level howeve, Expeditors is doing well in outperforming the market. One thing is certain in Wall’s eyes however – trade will continue. He concluded, “We also remain optimistic that trade will continue to flow, and we will work closely with our customers to find solutions to keep their cargo moving. We believe that wherever trade moves, we already have talented people and operational infrastructure on-site to handle that business.”
Author: Richard Shrubb
Source: Ti Insight
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