8-KOther Events

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report (Jan 16, 2001)

Filed January 16, 2001For Securities:EXPD

Summary

This Form 8-K filing from Expeditors International of Washington, Inc. (EXPD) on January 16, 2001, addresses investor inquiries primarily related to accounting standards, market capacity, competitive landscape, and operational strategies. The company confirms that new accounting rules regarding goodwill impairment, derivatives (FAS 133), and revenue recognition (SAB 101) are not expected to have a material impact due to its conservative accounting practices, immaterial goodwill, and lack of derivative trading beyond minimal currency hedging. Expeditors also anticipates stable to improving capacity in key trade lanes like Asia to U.S. for ocean cargo and generally expects no significant constraints for air cargo in 2001, with additional capacity expected into Europe from Asia and North America early in the year. The company remains confident in its ability to manage potential disintermediation from new economy players by emphasizing its integrated, hands-on approach to logistics and its status as a service-oriented business, akin to professional services rather than a commodity. Furthermore, Expeditors addresses its China strategy, noting that the anticipated WTO entry for the PRC is unlikely to significantly impact its 2001 growth but is viewed positively for long-term global trade expansion. The company highlights the strategic advantage of its Class 'A' license in China, enabling full logistics operations and strengthening its partnership with the Beijing City Government. Expeditors also sees potential benefits from ongoing industry consolidation, as it historically attracts personnel and customers seeking stability. The firm reiterates its non-asset-based model, emphasizing that its operational flexibility is not tied to ownership of transportation assets, but rather to strategic ownership of facilities and technology to support its integrated service delivery.

Key Highlights

  • 1Expeditors anticipates no material impact from new accounting rules (FASB, FAS 133, SAB 101) due to conservative policies and immaterial goodwill.
  • 2Capacity in the Asia to U.S. ocean cargo lane is expected to increase in 2001, with air cargo capacity remaining within normal seasonal patterns.
  • 3The company is not concerned about disintermediation from new economy competitors, emphasizing its integrated, hands-on service delivery model.
  • 4Expeditors views China's anticipated WTO entry positively for long-term global trade growth, despite minimal immediate impact on 2001 growth rates.
  • 5The Class 'A' license in China provides a significant operational advantage and strengthens its joint venture with the Beijing City Government.
  • 6Industry consolidation is viewed as a benefit, attracting new personnel and customers seeking stability.
  • 7Expeditors defines itself as a 'non-asset-based' provider, differentiating it from companies reliant on owning transportation fleets, despite owning some facilities and technology.

Frequently Asked Questions

Expeditors does not expect new accounting rules regarding goodwill impairment, derivatives (FAS 133), or revenue recognition (SAB 101) to have a material effect. The company has immaterial goodwill, a conservative revenue recognition policy, and minimal use of derivatives beyond hedging a few currencies.

For ocean cargo, particularly the Asia to U.S. lane, additional capacity is projected for 2001, especially in the latter half of the year. Air cargo capacity is expected to follow normal seasonal patterns without significant constraints. Capacity is also expected to increase into Europe from Asia and North America in early 2001.

Expeditors is not concerned about disintermediation. They argue that new economy companies often lack the integrated service delivery capabilities and track record required for complex logistics. Expeditors emphasizes its 'hands-on' approach, comparing global supply chain management to a professional service that requires direct control and an integrated system, not just information management.

The Class 'A' license, obtained through its joint venture with a division of the Beijing City Government, allows Expeditors to operate as a full-fledged logistics company in China, similar to its operations elsewhere. Without it, foreign entities can only have liaison offices and must use state-owned companies for core logistics functions. This license is a key differentiator and provides credibility.

Expeditors is 'non-asset-based' because its growth and service delivery are not limited by owning the physical transportation assets (like aircraft or vessels). These assets are acquired on a 'per trip' or 'as needed' basis. While they own facilities, furniture, and vehicles, these are not the core transportation assets that carry inherent risks associated with being an asset-based logistics supplier.