8-KRegulation FD

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report, Regulation FD Disclosure (May 21, 2012)

Filed May 21, 2012For Securities:EXPD

Summary

This 8-K filing from Expeditors International of Washington Inc. (EXPD), dated May 21, 2012, provides insights into the company's operational performance and market conditions during the first quarter and early second quarter of 2012. The report highlights ongoing weakness in airfreight volumes, which declined approximately 17% year-over-year in April, continuing a trend from the first quarter. Ocean freight volumes showed a slight increase of 1% in April, consistent with the first quarter's performance. The company attributes the airfreight decline to a general global market slowdown and a significant reduction in project cargo compared to the prior year. Vertical performance was stable, with no exceptionally strong sectors identified, though retail, some high-tech, and healthcare remained steady.

Key Highlights

  • 1Airfreight tonnage declined approximately 17% year-over-year in April 2012, indicating a continued trend of weakness.
  • 2Ocean freight container volumes increased by 1% year-over-year in April 2012, mirroring first quarter trends.
  • 3The decline in airfreight is attributed to a general global market decrease and a significant drop in project cargo compared to Q1 2011.
  • 4No specific verticals showed significant year-over-year strength; retail, high tech, and healthcare were noted as stable.
  • 5Expeditors views the shift towards deferred airfreight as an opportunity, leveraging its flexible and adaptable business model.
  • 6The company is appealing a €4.4 million European Commission fine for alleged price fixing, disagreeing with the EC's definition of infringement.
  • 7Expeditors is considering share repurchases if its stock is deemed undervalued, alongside its standard practice of offsetting stock option exercises.
  • 8Approximately 40% of the company's cash balance as of March 31, 2012, was held offshore.

Frequently Asked Questions

In April 2012, Expeditors experienced a continued decline in airfreight tonnage, down approximately 17% year-over-year. Ocean freight container volumes saw a modest increase of 1% year-over-year in April, consistent with trends observed in the first quarter of 2012.

The weakness in airfreight volumes is attributed to two primary factors: a general decrease in the global airfreight market and a significantly lower volume of project-related cargo compared to the first quarter of 2011. This reduction in project cargo is likely due to increased global economic uncertainty and reduced infrastructure investment compared to the previous year.

Expeditors views the increasing demand for deferred airfreight as an opportunity. The company believes its non-asset-based model, which emphasizes flexibility, adaptability, and integrated systems, is well-suited to manage deferred services effectively. This allows them to optimize transit times, work closely with customers and suppliers, and offer cost-effective, secure, and reliable solutions.

Expeditors disagrees with the European Commission's (EC) decision to impose a €4.4 million fine for alleged price fixing, believing the EC's definition of infringement is overly broad and not aligned with other jurisdictions, including the U.S. The company is contemplating appealing the decision but finds the process potentially costly and lacks confidence in a favorable outcome based on the EC's legal framework. Regarding the DOJ investigation into the same price-fixing matter, there have been no new developments reported since their last 10-Q filing on May 7, 2012.