8-KOther Events

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report (Dec 19, 2001)

Filed December 19, 2001For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) filed an 8-K on December 19, 2001, to disclose selected inquiries and their responses received up to December 15, 2001. The report provides insights into business trends, operating costs, and the impact of recent events like September 11th on the logistics industry. Notably, the company discussed the relative strength of ocean freight compared to airfreight in the initial months of Q4 2001, with October showing record profits but November results falling short of the prior year due to lower volumes and yields. The filing also addresses operational impacts post-September 11th, stating that internal operating costs have not increased, though third-party transportation service costs have. The company emphasized its ability to adapt to changing customs regulations as a core competency. Regarding financial performance, EXPD noted a slight sequential decrease in net revenue margin but downplayed its significance, highlighting the company's ability to manage yields. Forward-looking statements are included with a cautionary note about potential risks and uncertainties.

Key Highlights

  • 1Ocean freight was stronger than airfreight in the first two months of Q4 2001, though November 2001 saw a drop in net revenue due to lower volumes and slightly lower airfreight yields compared to the prior year.
  • 2Internal operating costs have not increased since September 11th; however, the cost of purchased transportation services from direct carriers has risen.
  • 3Carrier price adjustments related to increased operating costs have been passed on to shippers to the extent dictated by market conditions, customer circumstances, and service requirements.
  • 4Discontinued operations at Sabena and Swissair, as well as financial difficulties at Alitalia, have not materially impacted Expeditors' customer service.
  • 5Weakness in customs brokerage revenue is attributed to a year-over-year decline in shipment volumes (a trend predating September 11th) and the loss of the Ford brokerage business.
  • 6Expeditors anticipates spending up to $100 million over the next 3-5 years on real estate projects in key markets to accommodate growth.
  • 7The company has not repurchased any shares since its most recent buyback authorization.

Frequently Asked Questions

Expeditors provided the following expected release dates for 2002: 4th Quarter 2001 on February 12, 2002 (before market open), 1st Quarter 2002 on May 8, 2002 (after market close), 2nd Quarter 2002 on August 6, 2002 (before market open), and 3rd Quarter 2002 on November 5, 2002 (before market open).

For the first two months of Q4 2001, ocean freight was stronger year-over-year, while airfreight was somewhat weaker. October 2001 was a record profit month, but November 2001 did not surpass the prior year's results due to a decline in net revenue, primarily from lower volumes and slightly lower airfreight yields.

Expeditors' internal operating costs have not increased post-September 11th, and the company continues to realize cost savings through productivity initiatives. However, the costs for transportation services purchased from direct carriers have increased.

In response to a weakening market, Expeditors has focused on increasing productivity to reduce variable overhead expenses. They are also actively taking market share, recognizing that significant gains are needed just to maintain their position in a contracting market.