Expeditors' Results Continue to Impress Amid Transportation Supply Chain Disruption

Wide-moat Expeditors International’s fourth-quarter gross-revenue jumped more than 80% year over year--above our expected run rate thanks to a continued surge in yields (including core pricing), which offset lower-than-expected ocean volumes stemming from port disruption. Freight demand remains robust thanks to continued heavy retailer restocking that's supporting unusually strong import activity from the Asia-Pacific region. Comps toughened, but airfreight tonnage rose 13% year over year (up 27% for full-year 2021), while ocean volume fell 4% on severely limited capacity (but was up 19% for the year). Sell-rates to shippers for airfreight have surged on constrained capacity linked to limited belly space availability among commercial airlines. Sell rates on ocean freight have also soared on capacity imbalances and West Coast port congestion. We believe demand is thus far holding up nicely in the first quarter.