Expeditors Q3 2025: AI Lifts Airfreight Amid Ocean Freight Slump

Expeditors International of Washington, a key player in the global logistics industry, recently filed its third-quarter 2025 financial results. As a non-asset based provider, Expeditors doesn't own the planes, ships, or trucks that move freight; instead, it acts as a crucial intermediary, managing complex supply chains for a diverse range of clients. Let's delve into the numbers from their latest 10-Q filing to understand the company's performance in a dynamic global trade environment.

Overall, the quarter presented a mixed picture. Total revenues saw a slight dip of 3.5% to $2.89 billion compared to $3.00 billion in the same quarter last year. However, this top-line figure masks significant shifts occurring within the company's core services.

A Divergence in Freight Fortunes

Expeditors' business is primarily split into three segments: airfreight, ocean freight, and customs brokerage. In Q3 2025, these segments moved in very different directions:

• Airfreight Services: This segment showed resilience, with revenues growing 3% to $1.02 billion. The company attributes this to a 4% increase in tonnage, partly fueled by increased market demand from technology customers making investments in artificial intelligence infrastructure.
• Ocean Freight and Services: In stark contrast, ocean freight revenues plummeted 27% to $746 million. This significant decline highlights the volatility in ocean shipping markets, a key factor in the company's overall revenue decrease.
• Customs Brokerage and Other Services: This segment was a standout performer, with revenues climbing 13% to $1.13 billion. This growth indicates strong demand for services that help clients navigate the complexities of international trade regulations.

To visualize how these revenue streams and their associated costs flow through the company to generate profit, the following diagram breaks down the quarterly income statement.

Managing Costs and Profitability

While revenue performance was mixed, the company's profitability faced pressure from rising internal costs. Operating expenses for the services themselves were managed effectively, particularly in ocean freight where expenses fell 31%, even more than the revenue decline. However, overhead expenses told a different story.

Salaries and related costs rose 9% to $490 million, and other overhead expenses increased 14%. This pushed total overhead up 10% year-over-year. As a result, despite the strong performance in customs brokerage, the company's overall operating income fell 4% to $288 million. Net earnings attributable to shareholders saw a similar modest decline of 3%, landing at $222 million, or $1.64 per diluted share.

Share Repurchases Continue

One consistent theme for Expeditors is its commitment to returning capital to shareholders. During the third quarter, the company repurchased 1.77 million shares for approximately $212 million. This continues a long-standing discretionary buyback plan authorized by the Board of Directors, which aims to reduce the number of outstanding shares.

In conclusion, Expeditors' third-quarter results reflect a logistics industry in transition. The company is successfully capitalizing on high-growth areas like the tech sector's demand for airfreight while grappling with a sharp downturn in the ocean freight market. The primary challenge ahead will be balancing these external market forces with rising internal overhead costs to maintain profitability.