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Buoyant air freight markets boost earnings at Expeditors

Photo: Jim Allen/FreightWaves

Expeditors International rode a strong air freight business to a quarter that beat Wall Street estimates.

Total Expeditors revenue jumped 27% to $2.58 billion, which the SeekingAlpha website said topped estimates by $750 million. Earnings per share (EPS) under GAAP guidelines were $1.09, which beat consensus by $0.41 per share and were up from $0.88 per share in the second quarter of 2019. Non-GAAP earnings per share were $1.10, up from $0.90 per share.

Expeditors describes itself as “a non-asset based provider of global logistics services operating through a worldwide network of offices and exclusive or non-exclusive agents.” Being an intermediate in air freight movement is its primary activity. 

“Our airfreight revenue was much greater than anticipated,” Expeditors president and CEO Jeffrey Musser said in a prepared statement. “The air market has been particularly unsettled, with the cancellation of so many passenger flights limiting access to passenger belly space and requiring the increase of chargers to meet customer needs.”


That occurred alongside what Musser said was increased demand to move “technology-related equipment, medical equipment and supplies and other priority goods.” He said demand for the movement of those goods has been “intense, creating a supply and demand imbalance and a spike in buy and sell rates.”

Ironically, most truckload companies this quarter have talked about a three-month period in which April was terrible, May was somewhat better and June was better still. In his statement, Musser described the exact opposite for air freight. Air freight buy and sell rates peaked in April and May, he said, and began to decline in June. They remain “highly volatile and continue to be unpredictable.”

The specific figures are that April air freight, measured in kilos, was down 7% from a year ago, May was down 13% and June was down 12%, for a full quarter decline of 10%. The decline in ocean freight was 10%, 17% and 15%, respectively, for an overall drop of 14%.

But as a reflection of the rates it received, Airfreight Services revenue at $1.43 billion was up almost 93% from the second quarter of 2019, despite the drop in tonnage. Ocean freight revenue declined to $491.7 million from $543.8 million. 


Operating income for Expeditors as a whole rose 28%, to $247.6 million from $192.2 million.

Expeditors does not hold an earnings call with analysts. Last week, the independent research firm of  CFRA did publish an updated analysis of Expeditors,  in which it said analyst estimates for the company for EPS for the second quarter ranged from $0.55 to $1, which Expeditors beat. CFRA kept a Hold rating on Expeditors.

CFRA estimated that Expeditors earnings per share for all of 2020 would be down 26% from last year’s $3.39. But through six months, with the stronger than expected performance in the second quarter, Expeditors earnings per share is $1.80 or $1.83, depending on which approach is used. A 26% decline from last year would put EPS at about $2.50 or so on a linear basis, so Expeditors is well ahead of the CFRA forecast for the full year.

In its reiteration of a Hold rating, CFRA noted the short-term drop in volume from the pandemic. Longer-term, “looking to 2021 and beyond, however, we see EXPD achieving healthy long-term

earnings growth, as global economic expansion and integration eventually resume their growth

course and drive higher demand for international freight service.”

Despite beating analyst estimates, there was no initial kick in the stock price of Expeditors at the start of the trading day. Thirty minutes into trading, Expeditors’ stock was $85.34, down $0.49, a decline of 0.57% from the prior day’s close.

In its earnings statement, Expeditors said it has not laid off any employees because of the pandemic.


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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.