Expeditors International of Washington, Inc. Reports Fourth Quarter and Full-Year 2025 Results Amid Shifting Freight Market Dynamics
Expeditors International of Washington, has released its financial results for the fourth quarter of 2025, highlighting performance comparisons with the same period in 2024 and outlining strategic priorities for the year ahead. The global logistics and freight forwarding company navigated a challenging ocean freight environment and moderating airfreight margins while continuing to expand service offerings and return substantial capital to shareholders.
Fourth Quarter 2025 Financial Performance Overview
For the fourth quarter ended December 31, 2025, diluted net earnings attributable to shareholders per share declined 11% year-over-year to $1.49. Net earnings attributable to shareholders fell 15% to $201 million, reflecting softer operating conditions in key segments. Operating income decreased 17% to $251 million, while revenues edged down 3% to $2.9 billion compared to the fourth quarter of 2024.
Operationally, airfreight tonnage increased 6% year-over-year, demonstrating continued demand strength in certain trade lanes and customer segments. However, ocean container volumes decreased 6%, underscoring the persistent weakness in global ocean freight markets throughout 2025.
Despite earnings pressures, the company maintained a strong capital return program. During the fourth quarter alone, Expeditors returned $150 million to shareholders through dividends and share repurchases. For the full year 2025, total capital returned reached $875 million. Additionally, the Board of Directors approved a new $3 billion share repurchase authorization, reinforcing management’s confidence in the company’s long-term financial strength and cash generation capabilities.
CEO Commentary: Strategy Focused on Diversification and Growth
Daniel R. Wall, President and Chief Executive Officer, emphasized that comparisons to 2024 were expected to be challenging given the volatility and declining rate environment in ocean freight. Nevertheless, he expressed satisfaction with the company’s ability to expand its service portfolio and capture new business across multiple verticals.
Wall highlighted increased activity in customs brokerage, Transcon road freight, warehousing and distribution, and order management services. These growth areas reflect the company’s broader strategic objective of diversifying revenue streams beyond traditional air and ocean forwarding. By broadening its service mix, Expeditors aims to create a more balanced revenue profile and reduce exposure to cyclical fluctuations in any single mode of transport.
Management reiterated its commitment to pursuing growth across every geographic region, product line, and customer segment. The goal is to achieve a healthy revenue balance that supports sustainable long-term expansion while creating expanded career and development opportunities for employees worldwide.
Looking ahead to 2026, Wall stated that the company will focus on three core priorities: growth diversification, pricing optimization, and aligning operating costs with prevailing market conditions. Strategic investments will continue, particularly in high-return initiatives such as artificial intelligence (AI) applications and specialized vertical solutions tailored to industries with strong growth potential.
Airfreight Performance: Volume Gains Offset by Margin Pressure
In the airfreight segment, Expeditors experienced a 6% increase in tonnage compared to the fourth quarter of 2024, as well as sequential growth relative to the third quarter of 2025. This improvement was primarily driven by export volumes originating from North and South Asia, where customers—especially in technology sectors—continued to invest heavily in global supply chain capacity.
A surge in e-commerce and technology demand during the quarter contributed to increased cargo flows. However, rising buy rates in the air market compressed margins. While overall air gross margins declined modestly due to lower profitability per kilo, management noted that the business demonstrated resilience in volume terms.
Chief Financial Officer David A. Hackett observed that air margins declined by approximately two percentage points during Q4 2025 compared to the prior year period. Encouragingly, he indicated that margins had recovered much of that decline in early 2026, reflecting improving pricing dynamics and stabilization in procurement costs.
Ocean Freight Performance: Rate Declines Weigh on Revenue Per Container
Ocean freight presented the most significant headwind during the quarter. Ocean sell rates began to soften in late 2024 and experienced sharper declines throughout the third and fourth quarters of 2025, particularly on outbound routes from North and South Asia.
Average revenue per container dropped 41% compared to Q4 2024 and fell 17% sequentially from Q3 2025. These declines were driven by increased carrier capacity and subdued shipping volumes, which collectively intensified competitive pricing pressure.
The company also pointed to structural factors affecting the market. As global capacity continued to expand and additional vessels resumed transits via the Suez Canal, rate softness persisted. Management cautioned that ocean rates may remain under pressure into 2026 due to further capacity additions.
Despite these challenges, higher order management volumes and increased demand for ancillary ocean services partially offset revenue declines. Customers seeking enhanced visibility and control over complex supply chains turned to Expeditors for integrated forwarding and value-added services. Management confirmed it will continue adjusting ocean operating costs to align more closely with current market realities.
Customs Brokerage and Ancillary Services Deliver Strong Growth
One of the standout performers during the quarter was customs brokerage. Demand remained robust, reflecting both regulatory complexity and growing shipment volumes across global trade lanes. Expeditors has invested significantly in advanced technology platforms designed to reduce customs entry filing times and improve processing efficiency. The company is beginning to realize tangible productivity gains from these technology enhancements.
In addition to customs brokerage, other service categories achieved double-digit year-over-year growth. Transcon road freight and warehousing and distribution services were particularly strong, supported by volume growth tied to customers investing in global AI hyperscaler infrastructure. These infrastructure projects require sophisticated logistics coordination, benefiting providers with diversified capabilities.
Management also continues to invest in AI-driven tools aimed at further enhancing productivity, improving forecasting accuracy, and optimizing resource allocation. These initiatives are expected to deliver long-term efficiency gains and strengthen customer relationships.
Wall expressed appreciation for the company’s global operations teams, acknowledging their performance in a complex and rapidly changing environment. The operational workforce played a critical role in supporting customers with integrated solutions while managing growth across multiple product categories.
Expense Management and Strategic Investments
Operating expenses rose during the quarter, primarily due to strategic headcount additions in high-growth areas such as customs brokerage and ongoing investments in technology platforms. While expenses were higher than management would prefer, Hackett emphasized that these investments are designed to generate attractive long-term returns.
Excluding transportation-related costs, operating expenses increased less than one percent sequentially compared to the third quarter of 2025, indicating disciplined cost control despite revenue pressures. Management remains focused on aligning cost structures with market conditions while preserving the flexibility needed to pursue growth opportunities.
The company’s balanced approach—investing selectively while maintaining expense discipline—positions it to capitalize on improving market conditions without compromising operational strength.
Capital Allocation and Shareholder Returns
Expeditors maintained a strong commitment to returning capital to shareholders throughout 2025. During the fourth quarter, the company distributed $150 million through dividends and share repurchases. For the full year, total shareholder returns reached $875 million.
On February 23, 2026, the Board of Directors authorized a new $3 billion share repurchase program. This authorization will become effective upon the expiration of the current program, which concludes when outstanding common shares reach 130 million. The scale of this authorization underscores the company’s robust balance sheet, strong cash flow generation, and long-term confidence in its strategic direction.
Outlook for 2026
Although the company did not provide formal financial guidance, management conveyed cautious optimism regarding 2026. Airfreight margins have shown early signs of recovery, while diversification efforts across customs brokerage, Transcon services, warehousing, and order management continue to gain traction.
Ocean freight conditions remain uncertain, with further capacity increases potentially prolonging rate softness. However, Expeditors’ diversified service portfolio and disciplined cost management strategy are designed to mitigate volatility in any single segment.
As global trade patterns continue to evolve and customers increasingly demand integrated logistics solutions, Expeditors is positioning itself as a technology-enabled, diversified logistics partner. Strategic investments in artificial intelligence and vertical-specific solutions aim to capture emerging growth opportunities and enhance operational efficiency.
In summary, while fourth quarter 2025 results reflected margin pressures and ocean market weakness, Expeditors International of Washington, Inc. demonstrated resilience through diversified growth, disciplined capital allocation, and continued investment in innovation. The company enters 2026 focused on strategic expansion, cost alignment, and delivering long-term value for shareholders and customers alike.
Source Link:https://www.businesswire.com/