8-KRegulation FD

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report, Regulation FD Disclosure (Aug 27, 2008)

Filed August 27, 2008For Securities:EXPD

Summary

This Form 8-K filing from Expeditors International of Washington, Inc. (EXPD), dated August 27, 2008, provides answers to selected investor inquiries received through August 8, 2008. The company addresses various operational and financial topics, including the reasons for a delayed 8-K filing, performance in the European market, and the impact of rising fuel surcharges. Key discussion points include the company's operational strength in Europe during Q2 2008, attributing it to balanced performance across major offices and contributions from the Indian subcontinent and Asia. Expeditors acknowledges the complexity of the European market due to cultural diversity but expresses confidence in its long-term growth strategy. The filing also details the challenges and realities of passing through increased fuel surcharges to customers, emphasizing the necessity of such discussions to maintain service levels and profitability. Additionally, it touches upon the company's significant participation in the U.S. export market and capacity dynamics in both air and ocean freight.

Key Highlights

  • 1Expeditors explains the delay in its 8-K filing was due to time spent addressing DOJ subpoena compliance, not a lack of response to investor questions.
  • 2The company reported strong performance in its Europe, Middle East, and Africa (EMEA) region during Q2 2008, with balanced strength across major offices and contributions from various trade lanes.
  • 3Expeditors acknowledges the challenges of passing through rising fuel surcharges to customers but states that these conversations are necessary to maintain service quality and profitability.
  • 4The company highlights its significant role as the second-largest export airfreight forwarder in the United States.
  • 5Expeditors addresses capacity dynamics, noting sufficient airfreight capacity and manageable, though sometimes challenging, ocean export space.
  • 6Significant increases in legal and associated costs were reported, primarily related to compliance with the DOJ's subpoena, with no definitive end date provided.
  • 7The company provides detailed headcount figures for Q1 and Q2 2008, showing modest year-over-year increases across most regions.

Frequently Asked Questions

Expeditors stated that the delay in publishing an 8-K was primarily due to the significant time and resources required to comply with a Department of Justice (DOJ) subpoena. While the company acknowledged the inconvenience, it clarified that the relevant responses were included in this current filing and that the delay was not related to the DOJ investigation itself in terms of withholding information.

Europe and the Middle East (EMEA) showed strong performance in Q2 2008 compared to the prior year. The strength was well-balanced across major offices and driven by exports from the Indian subcontinent, imports from Asia and North America, and effective cost control and productivity initiatives.

Expeditors views rising fuel surcharges as a sensitive but necessary topic for discussion with customers. The company aims to pass these costs through to maintain service levels and profitability, acknowledging that while it can be a challenge and may take time, customers generally understand the reality of these increased costs as they face similar pressures.

Expeditors disagrees with the characterization of its industry as highly cyclical, arguing its business is less so than the general economy. The company believes its global diversification creates a 'portfolio effect' that helps mitigate the impact of economic downturns in any single region, allowing for more consistent growth.