Expeditors, the low-profile global logistics company based in Seattle, became Tuesday the latest to acknowledge the disruptive and costly effects of the novel coronavirus outbreak that began in China.
The company said its earnings were down for the fourth quarter, before the disease began its rapid spread. Profit fell 23% to $137 million; revenue dropped 9% to $2.04 billion. It attributed those declines primarily to “slowing trade to and from China,” where Expeditors gets more than a quarter of its business and profit.
Now the coronavirus or COVID-19 outbreak and ensuing closures of Chinese factories could have an unprecedented effect on trade, CEO Jeffrey Musser cautioned in the earnings announcement:
“Over our 40-year history, we have experienced many events that have disrupted supply chains. We have not, however, experienced a situation where manufacturing capability has been shut down or severely hampered to such an extent, so it is difficult to predict how this will play out.”
His statement pointed to manufacturing delays rippling through the world’s economy. “There remains a great deal of uncertainty as to when factories will return to full production, and those delays will have a significant impact on freight volumes moved in Q1 … (and) may have a further impact to global supply chains through potential shortages of raw materials, parts and supplies.”
The company, which has 176 offices on six continents to arrange product shipments, oversee customs and provide warehousing and distribution, called its China operations “a very important part of our global network.” Officials could not be reached for comment on how its personnel in China are faring and whether the offices there are open.
The company did not issue any financial forecast for 2020, although Musser’s statement said, “We remain steadfastly optimistic that when the marketplace does return to normal, we are in an excellent position to take advantage of what could be a sharp rebound in trade.”
Expeditors, Washington state’s 11th most valuable company by market capitalization, saw its stock close at $74,43, up 1.4%, after the premarket earnings release. It had revised its fourth-quarter earnings guidance last month and the results were within that range, Expeditors said.
On Monday, Apple warned that its iPhone supply would be constrained as Chinese factories that produce parts and assemble the smartphone are returning to work after the Lunar New Year holiday more slowly because of the coronavirus. The company said its sales in China also are affected — it has temporarily closed all 42 of its stores in the country.