Expeditors International of Washington Inc. achieved record profits and net revenue in the third quarter as the Seattle-based air and ocean freight forwarder benefited from lower taxes and kept ahead of rising transportation costs in a tight-capacity market.
The company reported net income of $162.7 million, or 92 cents a share, in the three months ended Sept. 30. That compares with net income of $120.3 million, or 66 cents a share, in the same period a year ago. Net revenue, which is total revenue minus the cost of purchased transportation, rose 10% to $661.3 million in the third quarter of 2018 from $599.1 million in 2017. Top-line revenue increased 16% to $2.09 billion from $1.8 billion.
CEO Jeffrey Musser said air and ocean freight-hauling capacity remains tight in many lanes, giving carriers an opportunity to increase pricing and raising costs for freight forwarders such as Expeditors.
“That presented a challenge, particularly in ocean, requiring that we work our strong relationships to secure space for our customers while remaining disciplined on pricing,” Musser said in a statement Nov. 6.
Senior Vice President and Chief Financial Officer Bradley Powell said operating profits as a percentage of net revenue topped 30% in the quarter as revenue gains outpaced increases in expenses. Airfreight tonnage rose 1% in the quarter, and ocean container volume increased 8% over the prior year.
Lower tax rates helped the company’s bottom line as well, with the effective tax rate of 21.8% in the third quarter of 2018 versus 36.7% in 2017.
Expeditors International ranks No. 5 on the Transport Topics Top 50 list of largest logistics companies in North America.