8-KRegulation FD

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report, Regulation FD Disclosure (Mar 15, 2016)

Filed March 15, 2016For Securities:EXPD

Summary

This 8-K filing from Expeditors International of Washington Inc. (EXPD) on March 15, 2016, primarily addresses investor inquiries received through March 4, 2016. The company provides insights into operational expenses, the impact of Amazon entering the NVOCC market, and its preparedness for new regulations such as SOLAS and ACE. Expeditors highlights its organic growth and robust in-house IT systems as a competitive advantage, particularly in light of competitors' challenges with mergers and IT integration. The company also discusses its strategic initiatives focused on growing market share in China and Europe, leveraging increasing regulation in North America. Management expresses concern about a potential slowdown in global trade but notes they haven't seen signs of a crisis like in 2008. They view industry consolidation as an opportunity for share gains and are committed to optimizing supply chains for customers, even if it means shifting modes of transport. Expeditors also reiterates its commitment to returning capital to shareholders through dividends and share repurchases, balancing this with investment in growth initiatives.

Key Highlights

  • 1Expeditors emphasizes its organic growth and in-house developed IT systems as a key differentiator, contrasting this with competitors' challenges in integrating systems post-acquisition.
  • 2The company is prepared for new regulations like SOLAS (Safety of Life at Sea) and ACE (Automated Commercial Environment), having adapted systems and engaged in customer outreach.
  • 3Strategic initiatives are focused on market share growth in China and Europe, with a particular emphasis on developing China's import business and China's customs clearance capabilities.
  • 4North American growth opportunities are being driven by increasing global trade regulations and compliance requirements, areas where Expeditors' expertise is valued by customers.
  • 5While concerned about a potential slowdown in global trade, Expeditors has not observed a repeat of the 2008 financial crisis severity.
  • 6The company believes industry consolidation presents opportunities for incremental share gains, focusing on people, processes, and technology as key differentiators.
  • 7Expeditors remains committed to returning capital to shareholders through dividends and share repurchases while prioritizing investment in business growth.

Frequently Asked Questions

Expeditors acknowledges Amazon's success and will continue to monitor their logistics strategy. However, they state that Amazon has not divulged much information about their strategy, and Expeditors does not have significant insights beyond publicly available information.

Expeditors is actively inventorying country-specific implementation plans for SOLAS. They are working on local processes and systems to support shippers in certifying container weights, understanding that methods and capabilities will vary by country and origin city. They will be ready to support shippers through these changes.

Expeditors' primary concern is a significant slowdown in global trade, similar to what occurred during the 2008 financial crisis. While they observed slower market conditions in the latter half of 2015, they have not yet seen signs of a return to that level of severity.

Expeditors sees industry consolidation as an opportunity for profitable share gains. They believe that many acquired companies may focus internally on integration, creating opportunities for Expeditors to win business by excelling in people, processes, and technology, which they consider the critical differentiators in the logistics space.