Expeditors International of Washington Inc. (EXPD, -1.29%) experienced a significant decline in its stock value as shares sank 5.8% to an eight-month low in premarket trading on Tuesday. The air and ocean freight logistics company cited a continued deceleration in demand and soft rates as the primary reasons for missing third-quarter profit and revenue expectations.
Disappointing Financial Performance
Net earnings for the quarter dropped to $171.4 million, or $1.16 per share, compared to $414.2 million, or $2.56 per share, in the year-ago period. This represents a considerable decrease, falling short of the FactSet consensus of $1.28 per share. Additionally, revenue plummeted by 49.8% to $2.19 billion, below the FactSet consensus of $2.29 billion.
Industry Challenges
“The shipping industry has been undergoing a great unwinding of so many of the drivers that led up to the massive mismatch of supply and demand that occurred during the pandemic,” stated Chief Executive Jeffrey Musser. He further explained that air and ocean capacity are now abundant, resulting in rates that remain significantly below those experienced during the pandemic.
Adjusting Workforce and Strategies
To navigate these challenging market conditions, Expeditors International of Washington has taken steps to align its headcount with transactions and volumes. Since the end of 2022, the company has already reduced its workforce by 8% and will continue to prioritize this optimization.
Stock Performance
Despite the recent decline, the company’s stock has seen a 10.7% drop over the past three months through Monday, while the Dow Jones Transportation Average (DJT, -0.07%) has experienced a decline of 12.6%, and the Dow Jones Industrial Average (DJIA, +0.10%) has shed 3.9%.