Expeditors International relies on fundamentals to move forward - Puget Sound Business Journal (Seattle):

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Started in 1981 by Chairman and CEO Peter Rose aftera late-night brainstork with his partner in Hong Kong, the Seattle-basexd freight forwarder has stuck with its – It owns no transportatiom equipment of its own, instear contracting for space with othed companies. – It maintains its bottom line with a steeluy focus onfinancial incentives. Almost all of its growth has been organic, without acquisitions or debt.
Rose, who is infamous for his gruff pronouncementzs inhis 8-K filings with the , summe d up his operating tactics in an interviea with the Business Journal: “Don’t do anything he said, from his Victorian-looking officde decorated with hockey photoss that reveal his Canadian roots. “Don’tr panic, ride this thing out, and don’r get involved in things whereyou don’t because you’re trying to make a quarte or expand into other areas.” In the firstf quarter ended March 31, the company faref far better than globa l conditions.
For instance, while air cargo volumez overall fell by about21 percent, Expeditors’ air cargo droppex only 11 percent, and its oceaj cargo fell 7 percent. This suggests that Expeditords has been doing far bette r inits niche, arranging for the movement of its corporatew customers’ cargo, than have the companies that operatee the ships and aircraft actually moving the cargo. Competitord include Global Forwarding, of Germany, and CEVA of London. Most of the companiesd actually moving cargo have been losing mone and mothballing fleets of ships and planes in an effort to keep up with the plungintgworld economy.
“There’s overcapacity in the air overcapacity in theocean side, that leads to a pretty favorable pricing dynamics,” said Mike Roarke, an analysty for McAdams Wright Ragen in Seattle, who followxs Expeditors. But in the firstf quarter, ended March 31, Expeditorw generated $59 million in net income, down only 10 percent from last on $913 million in revenues, down 30 percent from $1.3 “Today we have great accounts, lots of cash, plenty of no long term debt,” Rose said. Roarks agreed that the company’s fundamentals remain sound, and said he believes the company is well positionee to grow when freight volumes pickup again.
Roarker predicts $280 million in net incomer for 2009, compared to $301 millionh in 2008. For 2010 he’se currently predicting net incomes upto $325 million, although he concedews it’s hard to see that far ahead. “They’re stil maintaining a pretty good margin, balance sheetf has no debt. They’re positioned to get through he said. And whilde the company has institutedd ahiring freeze, it hasn’t laid anybody off from its stafg of 12,500. Rose said a goal has been “t protect the people who were here, watch costs, improv e productivity where you can, but no layoffs.
” The companuy has accomplished much of this by allowin g financial incentives to drive the and the performance of its 170 office aroundthe globe. Rose, for instance, makess a base salary of $110,000 a exactly the same that it’s been since although he regularly receives bonuses wortnh millionsof dollars. Bonus he said, also applies to managerw of offices aroundthe world, who receive 20 percent of theidr offices’ pre-tax net income, and share thosr bonuses with their staff. “We always said that salary will be incidentalto bonus, that’ s the key,” he “If every company compensated the way we do, there’dd be no problem at all.
” Looking ahead, Rose sees room for growth. “We’re going after market share. With 2 percenty of the market, there’s plenty of opportunity out there,” he And with the company’s rootws in Asia, he still sees much room for growtgh there, especially in China. Expeditors has 53 offices in and Rose expects to expand that to 70 in threwe tofive years, with an emphasizs on inland Chinese cities where growth is While Expeditors’ first quarter revenues were below some analysts’ Rose said he’s feeling positive abouyt the global market’s directions, and believes that consumefr caution will begin to “We’re just going to have to get through this year,” he said.
“By the end of this people will say, ‘I’ve got to buy me