Analyst Note| Matthew Young, CFA |
Wide-moat Expeditors International generated first-quarter gross revenue growth of 77% year over year, above our expected run rate on significant air and ocean volume gains. Strong growth stemmed from the pandemic-driven spike in consumer goods spending and heavy retailer restocking (in the United States and Europe), which has supported a surge in imports from the Asia-Pacific region. Airfreight tonnage rose 29% year over year (it was up 10% last quarter), while ocean freight volume also expanded 29% (up 19% last quarter). Freight demand started improving off pandemic lows during the third quarter of 2020 but heated up by the fourth-quarter peak season. At the same time, sell rates to shippers for airfreight (especially out of North Asia) spiked on extremely limited capacity linked to soaring demand and limited belly space availability among commercial airlines. Sell rates on ocean freight have also jumped due to capacity imbalances and heavy port congestion.