Expeditors: Air freight customers shipping less
Expeditors International of Washington cautioned investors that its first quarter results may miss estimates by Wall Street analysts.
"Our preliminary data seems to reveal a trend where existing customers, particularly air freight customers, are shipping at lower volumes than we experienced during the 2011 first quarter," said Peter J. Rose, chairman and chief executive officer.
He said Expeditors "has been very cautionary in its past two earnings releases about the fragility of the global economy and its potential impacts on future results. We’ve been saying for over six months now that things in the global economy just didn’t seem to us to be as encouraging as a lot of the pundits were projecting."
The company said preliminary results indicate its first quarter 2012 net earnings attributable to shareholders are expected to fall in the range of 35 to 37 cents per share, compared to an analyst consensus of 43 cents.
"As we proceed forward in 2012, we need to be even more aggressive in cost containment and more focused on both expanding our customer base and further extending our business reach with existing customers,” Rose said.
David Ross, an analyst with Stifel Nicolaus, said "forwarders are feeling the pinch of soft volumes (especially transpacific air freight), coupled with rising capacity rates (particularly in the transpacific ocean market)."
He said his company is "cautious near-term on Expeditors" and was lowering its estimates on Expeditors' earnings per share for 2012, 2013 and 2014 went from $2, $2.18, and $2.36, respectively, to $1.75, $2, and $2.20.
Ross said "we believe near-shoring/re-shoring/on-shoring trends are real and should limit growth in transpacific container trade. Coupled with the fact that significant market players like FedEx and Kuehne + Nagel are looking for more transpacific freight forwarding business, this means that historical Expeditors growth rates are just that - old growth rates.
"Newer markets/lanes the company would enter (like transatlantic) should not be as profitable for them, in our opinion, because Expeditors does not have the same buying power there as it does in transpacific/Asia export lanes. Also, in those newer lanes for the company, customs brokerage is not as complex/lucrative, and the length of haul of shipments is usually not as great," he said. — Chris Dupin