8-KRegulation FD

EXPEDITORS INTERNATIONAL OF WASHINGTON INC 8-K Report, Regulation FD Disclosure (Mar 13, 2017)

Filed March 13, 2017For Securities:EXPD

Summary

This 8-K filing from Expeditors International of Washington Inc. (EXPD), filed on March 13, 2017, provides insights into the company's operational strategies and market outlook as of early 2017. A key theme discussed is the ongoing rate volatility in the freight forwarding industry, which the company attributes to prolonged supply/demand imbalances caused by events like technology product releases and carrier bankruptcies. Expeditors emphasizes its strategy of maintaining a balanced mix of fixed and spot market pricing with carriers and offering price flexibility to customers to manage margins through this unpredictable environment. The filing also highlights the company's continued investment in its proprietary, in-house developed technology platform as a significant competitive advantage, enabling efficiency, global consistency, and tailored customer solutions. Management views technology not as a means to reduce headcount but to enhance efficiency, allowing the company to leverage its workforce for greater growth and customer acquisition. Furthermore, Expeditors outlines strategic initiatives focused on geographic expansion and service enhancement, particularly in growing its import business into China, aligning its European and Asia-Pacific/North American operations, and expanding its North American market share, including its U.S. Transcon business. The company views disruptions in global trade as opportunities to leverage its expertise in guiding customers through complex changes. Overall, the report suggests Expeditors is proactively navigating market challenges and strategically investing in its core strengths to maintain its market leadership position.

Key Highlights

  • 1Expeditors is actively managing prolonged freight rate volatility through a balanced approach to carrier pricing and customer flexibility.
  • 2The company views its proprietary, in-house developed technology platform as a significant competitive advantage, fostering efficiency and global consistency.
  • 3Strategic growth initiatives include strengthening its China import business and aligning European operations with its established North American and Asia-Pacific networks.
  • 4Expeditors is investing in its U.S. Transcon business, targeting growth in sectors like retail, high tech, and medical devices with value-added services.
  • 5The company considers disruptions in global trade, such as potential NAFTA revisions or Brexit, as opportunities to guide and support customers.
  • 6Technology is seen as a tool for optimization and efficiency, enabling the company to handle increased shipment volumes and leverage its workforce effectively, rather than reducing headcount.

Frequently Asked Questions

Expeditors is managing freight rate volatility by maintaining a well-balanced mix of fixed and spot market pricing with carriers and offering reasonable price flexibility with customers. They aim to provide predictability and consistency to customers, especially during times of market constraint, by leveraging their broad carrier relationships. The company expects this volatility to continue in the near term as supply/demand imbalances correct.

Expeditors' technology platform is a competitive advantage because it has been primarily developed in-house by employees with deep knowledge of the freight industry. This results in a globally consistent platform engineered specifically for freight forwarding, avoiding the integration challenges often seen with acquired or off-the-shelf systems. The in-house development also allows for greater flexibility in introducing broad-based innovation, developing data analytics, tailoring reports for specific customer needs, and efficiently moving data between customers, carriers, and customs.

Expeditors has four strategic growth initiatives. Three of these focus on specific geographies: aligning and integrating European operations with Asia-Pacific and North American interests, growing their import business into China, and expanding North American market share. The company is investing in these areas to add strength and align operations, particularly in Europe and for China imports. They also see significant opportunity in their U.S. Transcon business.

Expeditors views potential changes in global trade relations, such as revised trade agreements or Brexit, as opportunities rather than obstacles. The company's long-standing expertise lies in helping customers navigate these complex changes. While they remain apolitical and do not employ lobbyists, they are prepared to lead their customers through alterations in global trade agreements and government policies.