Peter J. Rose Chairman of the Board & CEO 2012 EXPEDITORS ANNUAL REPORT 3

Transcription

1 To Our Shareholders 2012 Another year, another anomaly. Apart from coming through a difficult year, as usual, we did pretty well. Tough times don t last, tough people do, and we have an abundance of those such people.

2 The bright, albeit bitter sweet, note was a closure letter from the D.O.J.; one paragraph indicating that we were no longer a subject of their industry-wide investigation into anticompetitive behavior. Five years and nearly twenty million dollars later, we re very pleased to have emerged from this D.O.J. ordeal as we thought we would, i.e. no adverse findings and no fines or penalties. The one company that got immunity got off free from their admitted misdeeds and cost the entire industry millions. It s a shame, but the saga is over. It s not politically correct, and seldom are we, to continue our hiring freeze. But, first and foremost our commitment to shareholder value must begin with our commitment to protect the people who are here. They are the ones who create that value and they and their families come first. I refrain from any political statements as this letter would be ten pages in length. We continue our improvement in I.T. solutions with a great team and also have a very robust compliance system globally. Our carrier relations, both Ocean and Air, are solid and we have great thirdparty partners. We continue to take profitable market share without losing anything significant. Shipment count is up despite smaller volume and less weight in shipments. More market share in declining markets is difficult to measure. As we ve shown in the past, the true measurement of those down-market gains become most acutely measurable when the market turns and it will turn. Because of the global economy, 2013 should be only slightly better. As we enter our 34th year, there is one word that lights our company ENDURANCE. When asked what s in store for the future, the answer is always the same, just more of the same. This year we opened new offices in Santo Domingo in the Dominican Republic Montevideo, Uruguay, Copenhagen, Denmark and Luxembourg. We also had an open house for our office in Beijing which is state of the art. We will endure next year and as always we thank our shareholders, our customers, our carriers, and, most importantly, the best people in the industry ours. Peter J. Rose Chairman of the Board & CEO Certain portions of this document contain information not included in the Company s Form 10-K filed on February 27, 2013 and thereby may not be subject to the notice of forward-looking statements contained therein. Those portions not included in the referenced Form 10-K include the Chairman and Chief Executive Officer s letter to shareholders, as well as comments written by each of the Company s three Geographical Presidents which also contain certain forwardlooking statements that are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any forward-looking statements depending on a variety of factors including, but not limited to, successful implementation of or future benefits from third-party and self-developed software systems, global economic or political environments, ability to increase future market share, obtain new customers, or maintain current customers; ability to control future expenses; changes in customer demand for Expeditors services caused by a general economic slow-down, inventory build-up, decreased consumer confidence, volatility in equity markets, energy prices, political changes, changes in foreign currency rates, or the unpredictable acts of competitors, as well as any and all forward-looking statements contained in the above-referenced Form 10-K EXPEDITORS ANNUAL REPORT 3

3

4 Asia Pacific 2012 was definitely a difficult year for most businesses, and ours was no exception. The market competition was extremely severe, however we took an aggressive approach to increase our business and successfully onboarded quite a few new logos. On the other hand, we exercised prudent expense control to minimize the impact on our operating income of slightly narrowed margins. Despite the challenging market conditions, our continued investment in infrastructure and new products was rewarded by the growth we experienced in our Transcon and Distribution Services businesses. With the ongoing uncertainties in the world economy, the outlook for 2013 is somewhat hazy at this point in time. We are prepared for carriers to continue to aggressively manage capacity, and for customers to persist in their drive for logistics providers to offer lower costs and increased liability limits. In response to that, we will stick with our core competency to focus on extraordinary customer service through offering total solutions, strategic trade lane capability and product diversification. Most importantly, we are continuing to invest in our people and in servicing the network, with strong confidence that our business will keep growing in the coming years and we are ready for it! James L.K. Wang President - Asia Pacific 2012 EXPEDITORS ANNUAL REPORT 5

5 The Americas 2012 was a challenging year for the Americas from a growth perspective. While not up to our usual growth standards, we still continued to make the kinds of critical investments within the Region that managing for the long-term requires. We expanded our footprint in Latin America, by opening in Santo Domingo, Dominican Republic which is a major market in the Caribbean for us, particularly in the garment industry. We also opened Montevideo, Uruguay which has a stable economy and a Free Trade Zone to service our customers in the deep South of Latin America. We expanded our service offering in Lima, Peru, by opening a separate customs brokerage company.

6 We continued to invest in defending and extending our market share with existing customers by implementing our Customer Retention Development program. Expanding our capabilities with Business Analytics is another area where the region has invested. We have a dedicated group who use state of the art analytics software to help us make more educated operational decisions. This influences the way we purchase, how we organize our sales force and related infrastructure and how we improve the efficiency of our customer billings. The not hired guns or the infamous quants with no knowledge of the business. They are Expeditors employees, who all have detailed knowledge and experience in the logistics industry. Twinning industry knowledge and experience with powerful analytical techniques not only has great potential for us, it has already made an impact on our customer service capabilities. We ve invested in diversifying our product mix through investments in our distribution services capabilities made by installing a high-end third party software suite. We believe, this enhanced capability will help us meet the needs of the more complex, sophisticated distribution accounts, particularly those accounts requiring assistance with VMI (Vendor Managed Inventory). We invested in our Ocean Export functionality by implementing a software-based solution which will allow our Ocean Export managers to navigate and manage contracts and quotations to our customers faster and with more efficiency. We anticipate that these investments will start to pay off in Looking forward to 2013, one area of focus will be continued network expansion. Panama is next on our list of planned locations. Data Analytics will take on an increasingly major role in our sales, operations, productivity, service provider management and procurement efforts. Finally, we will continue our focus on compliance, as we see this as a differentiator that is an inseparable component of our continued commitment to provide the best customer service in any industry. Robert L. Villanueva President - The Americas 2012 EXPEDITORS ANNUAL REPORT 7

7

8 EMAIR We experienced another tough year in 2012 throughout the entire EMAIR region. However, with our dedicated staff, our customers support, and the important relationships we have with our service providers, we held on. We also closely watched our expenses and put a major emphasis on customer retention and customer service. Project EMAIR, is the theme for our focus, goals and objectives for This includes cost cutting and cost containment through maintaining a hiring freeze, traveling less, working more closely with our service providers and reducing total cost through technology and innovation. We also believe that this focus will create and increase business volumes. Key to our success for Project EMAIR is our objective to drive increased revenue from new strategic EMAIR-based accounts, increase our overall market share in all products, and to increase our business from our existing clients. As usual I want to thank each and every EMAIR employee, our customers and our service providers. Rommel C. Saber President - Europe, Africa Near/Middle East & Indian Subcontinent 2012 EXPEDITORS ANNUAL REPORT 9