Analyst Note| Matthew Young, CFA |
Wide-moat Expeditors International’s fourth-quarter gross revenue surged 55% year over year, well above our forecast, on robust tonnage acceleration. Relative to fourth-quarter 2019, which wasn’t stellar, growth stems in part from the pandemic-driven spike in consumer goods spending and related heavy retailer restocking (in the United States and Europe), which has driven up imports from the Asia-Pacific region. Airfreight tonnage rose 10% year over year (it was down 5% last quarter), while ocean freight volume grew 19% (down 5% last quarter). Recall freight activity improved off pandemic lows last quarter, but turned much more favorable during the peak season. At the same time, airfreight rates (especially out of North Asia) have jumped on highly constrained capacity linked to strong demand and limited belly space availability among commercial airlines. Sell rates to shippers on ocean freight jumped on capacity imbalances as well.