Expeditors International profits hit by falling volumes and rates

“Our final financial results for the fourth quarter were within the range of earnings guidance we issued last month,” said Jeffrey S. Musser, Expeditors president and CEO, in a statement. “As noted in that guidance, we do not believe this comparatively soft fourth quarter is the result of a business performance issue, but is instead more closely tied to the business environment in which we are operating.”

Musser also issued a stark warning about the fallout from the coronavirus outbreak in China.

“Over our 40-year history, we have experienced many events that have disrupted supply chains,” Musser said. “We have not, however, experienced a situation where manufacturing capability has been shut-down or severely hampered to such an extent, so it is difficult to predict how this will play out. However, we remain steadfastly optimistic that when the marketplace does return to normal, we are in an excellent position to take advantage of what could be a sharp rebound in trade.”

Operating margins widened in airfreight and ocean freight, but narrowed in customs brokerage and other services, where revenue grew by 7.4% but operating expenses grew 10.5%. In airfreight and ocean freight, drops in revenue were outpaced by drops in operating expenses.

On a region-by-region basis, Expeditors’ two most important regions, the United States and North Asia, both saw revenue declines. U.S. revenue fell 1.4%; there was a dramatic 25% decline in North Asia. Those volumes are not being replaced by South Asia revenue, which also fell, dropping 13.3% compared to the fourth quarter of 2018. In fact the only region in which revenues grew was Latin America, where revenues increased by 12.4%.