Business & Investment

Supply chain problems won’t go away immediately

Shares at Expeditors International of Washington Inc. peeked into the positive territory on Tuesday, reversing previous sharp losses after air and sea freight companies exceeded second-quarter profit and earnings expectations. The supply chain problem that weighs on business is a foreseeable future.

Chief Executive Officer Jeffrey Masser said:

+ 0.33%

It fell 3.6% during the day before it rose 0.4% in the afternoon trading.

Seattle-based company Report before opening bell net profit This increased from $ 183.9 million ($ 1.09 per share) in the year-ago quarter to $ 316.4 million ($ 1.84 per share). This exceeded the FactSet consensus of $ 1.63 in earnings per share.

Revenues increased 49.7% to $ 3.61 billion, surpassing FactSet’s consensus of $ 3.4 billion. Meanwhile, transportation and other costs directly related to transportation increased 56.7% to $ 2.60 billion, while payroll and other costs increased 19.5% to $ 599.8 million.

Within the company’s business unit, air cargo service revenue increased 20.0% to $ 1.52 billion, below FactSet’s consensus of $ 1.59 billion. Meanwhile, sea freight and marine services revenue more than doubled from $ 489.4 million to $ 1.10 billion, surpassing expectations of $ 975.2 million. Customs and other services revenue increased 51.4% to $ 987 million, higher than expected at $ 944.4 million.

FactSet, MarketWatch

CEO Masser said that tonnage of air cargo and volume of marine containers reached records and trading rates remained significantly higher than pre-pandemic levels, but port congestion and trade flows. The shortage of ruined equipment was “not easy,” he said. It’s much better than earlier this year.

“Currently, the global infrastructure for moving cargo appears to be nearing its limits, so no significant improvement in the operational environment is expected, at least for the rest of the year,” Masser said. Mr. says. “Stable demand is all more difficult due to additional turmoil such as limited warehouse space, staffing constraints, port congestion, equipment movements, driver shortages, and even closures. We are hitting market capacity constraints. The outbreak of COVID-19 in May or the destruction of Yantian Harbor due to the closure of the Suez Canal in March. “

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Masser continues to be optimistic that the situation will eventually improve, and he cannot predict when and how.

Cohen analyst Jason Saidle has repeatedly evaluated market performance, raising the stock price target from $ 139, which is about 9.4% above current levels, to $ 139.

“The company doesn’t provide guidance, but in the short term the trend seems to be stable and strong, but eventually interest rate stabilization and imbalances will normalize over time. Probably, “Seidl wrote in a note to the customer. “Given the industry commentary we’ve heard through our first-quarter earnings, we anticipate that the normalization story is likely to unfold in 2022.”

Expeditors’ share has risen 12.4% in the last three months, but the Dow Jones Transportation Average
+ 1.28%

6.8% down, Dow Jones Industrial Average 30
+ 0.67%

It has increased by 2.8%.

Supply chain problems won’t go away immediately Supply chain problems won’t go away immediately

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