Expeditors: Buy rates put pressure on profits in erratic Q2
07 / 08 / 2024
Jeffrey Musser of Expeditors. Image Source: Expeditors
Expeditors saw its profits decline in the second quarter of the year despite increases in airfreight revenues and volumes.
The Seattle-headquartered forwarder saw second-quarter airfreight volumes increase by 15% and air revenues improve by 14.5% to $860.3m. However, airfreight expenses rose by 22.9% compared with last year.
There was a similar trend for its ocean business which resulted in net income declining 12.6% year on year to $179m.
The company said the profit decline came as carrier prices increased faster than it was able to pass through to customers.
“We continued to adapt well to another erratic quarter for our industry, which has been impacted by the rapid changes and imbalances in buy versus sell rates, particularly on exports out of Asia,” said Jeffrey Musser, president and chief executive.
“Air market capacity has been constrained by e-commerce demand, and ocean routing has been significantly disrupted by geopolitical events in the Red Sea, causing less frequent services due to blank sailings, longer transit times as well as port congestion.
“We have continued to adjust to the disruptions and uneven demand, keeping costs in check while we work to bring efficiency back in line with historical expectations.”
For the airfreight market, he said: “Buy rates outpaced increased sell rates, as international direct e-commerce demand from North Asia outweighed increased carrier capacity to accommodate this growth in demand. The air markets have further been impacted by manufacturing relocations.”
The company said that it was “challenging” to see much beyond the day-to-day levels of activity and added that while there were some signs of improving market conditions, there is much uncertainty with regard to demand, capacity, and pricing.
“Not to mention unpredictable events with the potential to impact global shipping for days, weeks, or even longer,” said Musser. “I am grateful for the customer-focused dedication of our workforce, particularly during these unpredictable times. We remain focused on keeping costs in check and are ready to pivot for whatever new challenges arise.”
