The quarterly earnings statement of Expeditors International is straightforward about the squeeze in the supply chain and the fact that it isn’t ending anytime soon.

“Currently, we do not foresee any meaningful improvements to the operating environment over at least the remainder of the year, as the global infrastructure for moving freight seems nearly stretched to its limit,” Jeffrey Musser, president and CEO of Expeditors (NASDAQ: EXPD), said in the statement announcing the company’s second-quarter earnings. “Robust demand is bumping up against capacity constraints in the air and ocean markets, all of which is made more challenging by limited warehouse space, staffing constraints, port congestion, equipment dislocations, and driver shortages, not to mention additional disturbances such as the closure of the Yantian [China] port due to a COVID-19 outbreak in May or the blockage of the Suez Canal back in March.”

Buy/sell rates will remain “unsettled” for the rest of the year, Musser said. 

The squeeze on capacity did lead to a strong quarter for the company. Net earnings attributable to shareholders climbed 72%, to $316.3 million from $183.9 million in the second quarter of 2020. Sales revenue rose 50% to $3.6 billion but the company saw its own costs in acquiring capacity rise more than that, up 56% to $2.6 billion. For the six months, the cost of transportation outstripped the increase in revenues, with costs up 68% as revenue rose 60% compared to the second quarter of last year. 

But with operating income up 66% for the quarter, the company outperformed its increase in capacity costs. Expeditors kept its own labor costs in check, with those rising just 19%.

According to SeekingAlpha, the quarter’s non-GAAP earnings per share of $1.84 beat consensus by 21 cents. That also was the “beat” for GAAP EPS of $1.87. Revenues of $3.6 billion beat consensus by $110 million, according to SeekingAlpha. 

Expeditors got busier in its airfreight activity as the quarter rolled on. Its year-on-year increase in airfreight measured in kilos was 29% for April, 39% for May and 46% in June. That is particularly notable given that April 2020 is generally considered the low point in freight traffic’s pandemic-related decline, with business picking up beginning in May. Yet the percentage increase in air freight tonnage for the company was higher in May and June than it was in April.

On the water, the year-on-year increase in tonnage was 34% in April, 36% in May and 30% in June.

“We continued to move unprecedented volumes during the quarter, as ocean and air buy/sell rates remained elevated and volatile, capacity was extremely tight, and supply chain disruptions showed no signs of abatement,” Musser said. He said there is no “quick and simple fix” to the problems in the supply chain, “and every one of our transactions seems to require significantly more attention and dedication.”

Expeditors does not hold an earnings call with analysts. Its stock had little reaction to the earnings announcement, rising 0.02% for the day. But it has been on a strong roll for the past year. Expeditors had already hit a 52-week high as recently as July 26, when it touched $130.76. The company’s stock is up about 47.3% in the past 52 weeks.

In May, Expeditors announced a semiannual dividend payment of 58 cents, up from 52 cents. That solidified its position as a “dividend aristocrat,” a company that has increased its dividend for 25 or more years. It is the only logistics company on the list of more than 65 companies that meet that criteria.

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