8-KOther Events

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report (Sep 18, 2002)

Filed September 18, 2002For Securities:EXPD

Summary

This 8-K filing from Expeditors International of Washington, Inc. (EXPD), dated September 18, 2002, provides responses to a series of investor inquiries. Key themes include the company's strategic approach to partnerships, operational expansions, and market conditions affecting freight yields. Expeditors clarifies its stance on collaborations with asset-based logistics companies, emphasizing a preference for maintaining its non-asset-based model. The report also addresses operational growth, such as the lease of a new facility in Grapevine, TX, to accommodate expanded business in the Dallas area. It touches on pricing dynamics, including fuel surcharges and their pass-through to customers, as well as the impact of rate increases on airfreight and ocean freight yields. The company indicates positive year-over-year growth in operating income for July and August 2002, while declining to comment specifically on the third-quarter earnings consensus.

Key Highlights

  • 1Expeditors maintains a cautious approach to formal partnerships with asset-based logistics companies, prioritizing its non-asset-based operating model.
  • 2The company is experiencing growth in its Dallas operations, necessitating the lease of a larger office-warehouse facility.
  • 3Fuel surcharges are a standard practice, with the company expecting 'everybody pays' and not taking direct price risk.
  • 4Recent airline rate increases have impacted yields, but Expeditors expects positive impacts on airfreight margins quarter-over-quarter after customer discussions.
  • 5Ocean carrier rate increases appear to be 'sticking' in the short term, though adhesion is still being monitored.
  • 6Operating income showed strong year-over-year percentage growth in July and August 2002.
  • 7Expeditors is increasing its use of weekly charters compared to the previous year, but emphasizes strategic and risk-managed utilization.

Frequently Asked Questions

Expeditors cooperates with asset-based companies as part of its core business but is wary of formal partnerships or joint ventures. They are cautious about arrangements that could compromise their fundamental operating characteristic as a non-asset-based provider of integrated logistics services, fearing the detriments of being asset-based without the benefits.

The company is leasing an 84,160-square-foot office-warehouse facility in Grapevine, TX, to accommodate the growth of its Dallas office and associated warehousing needs. All areas of their Dallas business have outgrown their previous facility.

Expeditors views fuel surcharges as a mandatory cost that is passed through to customers, stating 'EVERYBODY PAYS.' They do not take 'price risk' on fuel surcharges; if they do not pass them on, their margins are directly impacted.

Expeditors is not willing to provide regular, unsolicited monthly statistics for pure air and ocean volume figures. They cite that these figures are not subjected to the same scrutiny as financial numbers and that providing them could lead to demands for more granular data. They also believe tonnage figures are less relevant for a non-asset-based company with theoretically unlimited capacity.