The troubled airfreight industry struck a chord as Expeditors International of Washington reported a 5% decline in fourth quarter 2011 revenue. Airfreight and ocean freight revenue declined for the quarter, 5.1% and 8.3% respectively; however, revenue from its customs brokerage and other services segment increased 10%. The company was able to manage costs well as total net revenue for the quarter increased 5% to $476m.
For the year 2011, revenue increased 3% to $6.1bn and net revenue increased 12% to almost $1.9bn. The ability to manage costs and increased rates were probably the main reasons for the revenue gains rather than any increase in demand due to a muted freight environment.
Airfreight makes up slightly less than 50% of Expeditors’ total revenue. However, for the fourth quarter, revenue for this segment declined 5.1%. Tonnage also declined each month during the quarter resulting in a 10% decline. Comprising almost 31% of total revenue, Ocean freight revenue also reported a decline for the quarter, 8.3% to $441m. But, tonnage increased 3% thanks in part to lower rates and early restocking of inventory ahead of the Chinese New Year. The Customs brokerage and other services segment continued to be a bright spot for the company with a quarterly revenue increase of 10% to $355m and overall 2011 revenue increase of almost 16% to about $1.4bn. Strong US-Canada-Mexico cross-border activity probably attributed to this increase as the Other North America geographic region reported one of the strongest net revenue growth increases for fourth quarter compared to the company’s other reporting geographic regions, with an increase of 20% to $24.4m as well as for 2011, with a 17.3% increase to $90.4m.
Although the Other North America geographic region made great strides in 2011, the Asia-Pacific geographic region remains the company’s largest contributor of revenue. For 2011, the region accounted for almost 52% of total revenue. Expeditors attributed much of the quarterly decline in revenue and tonnage on the fact that many freight carriers either reduced capacity or shifted capacity to other markets because of softening Asian exports. This, however, is likely to continue for the foreseeable future due to lower demand from Asia’s largest trade partners, the US and Europe. As a result, Expeditors’ revenue and tonnage may continue to decline if Asian demand does not improve.