Expeditors reports declining revenue but a strong net revenue increase for third quarter 2011

Expeditors International of Washington’s third quarter earnings reflected a lackluster global freight market. Revenue declined 4% to $1.6bn; however, net revenue increased 8%. Operating margins improved to 10.2% from 9.6% for third quarter 2010.

Both air freight and ocean freight reported declines in not only revenue, but also in tonnage. Air freight revenue declined almost 2% to $737m while air freight kilos declined 4%. Ocean freight revenue declined almost 15% to $511m and ocean freight TEUs declined 2%.

The declines in air and ocean freight revenues are a reflection of the current overall market. Ocean freight market rates have plummeted this year and demand for air and ocean freight has fallen due to uncertainty in the European and US economies. In particular, declining exports from Asia Pacific are having a major impact on Expeditors. Asia Pacific is Expeditors‘ largest geographic segment, responsible for almost 55% of the company’s total revenue in 2010. For third quarter, revenues for the Asia Pacific and Middle East & India regions declined 13.08% and 5.9% respectively. However, net revenue increased for both regions at 6.2% and 4.7% respectively. In addition, an office was opened in Pusan, Korea and a satellite office in Tiruppur, India was closed.

A bright spot for the company was found in its Customs Brokerage and Other Services segment. Revenue increased over 13% to $359m. It is believed some of this increase may be attributed to strong activity along the US-Canada and US-Mexico borders.

By geography, strong revenue gains were noted in the Europe and Africa group, increasing 19.4% to $240m and the Other North America group, increasing 11.5% to $52m. Net revenue gains were noted in all geographic groups as the company was able to effectively maintain operational costs.

Looking ahead to the fourth quarter, because the ocean freight market has not improved, it is quite possible that Expeditors may face another quarter of declining ocean freight revenue and tonnage. However, the air freight sector remains in the balance as potentially the global market may experience a burst of air freight demand if consumer demand increases. In either case, Expeditors will face a difficult comparison from a strong fourth quarter in 2010.

Quelle: eyefortransport
Portal: www.logistik-express.com