Expeditors International of Washington, Inc. is engaged in the business of
providing global logistics services. The Company offers its customers a seamless
international network supporting the movement and strategic positioning of goods.
The Company’s services include the consolidation or forwarding of air
and ocean freight. In each United States office, and in many overseas offices,
the Company acts as a customs broker. The Company also provides additional services
including distribution management, vendor consolidation, cargo insurance, purchase
order management and customized logistics information. The Company does not
compete for domestic freight, overnight courier or small parcel business and
does not own aircraft or steamships.
The Company was incorporated in the State of Washington in May 1979. Its executive
offices are located at 1015 Third Avenue, 12th Floor, Seattle, Washington, and
its telephone number is (206) 674-3400.
Beginning in 1981, the Company’s primary business focus was on airfreight
shipments from Asia to the United States and related customs brokerage and other
services. In the mid-1980’s, the Company began to expand its service capabilities
in export airfreight, ocean freight and distribution services. Today the Company
offers a complete range of global logistics services to a diversified group
of customers, both in terms of industry specialization and geographic location.
As opportunities for profitable growth arise, the Company plans to create new
offices. While the Company has historically expanded through organic growth,
the Company has also been open to growth through acquisition of, or establishing
joint ventures with, existing agents or others within the industry.
In its airfreight forwarding operations, the Company procures shipments from
its customers, determines the routing, consolidates shipments bound for a particular
airport distribution point, and selects the airline for transportation to the
distribution point. At the distribution point, the Company or its agent arranges
for the consolidated lot to be broken down into its component shipments and
for the transportation of the individual shipments to their final destinations.
The Company operates Expeditors International Ocean (“EIO”) an
Ocean Transportation Intermediary, sometimes referred to as, a Non-Vessel Operating
Common Carrier (“NVOCC”) specializing in ocean freight consolidation
from Asia to the United States. EIO also provides service, on a smaller scale,
to and from any location where the Company has an office or agent.
The Company provides customs clearance services in connection with many of
the shipments it handles as a freight forwarder. However, substantial customs
brokerage revenues are derived from customers that elect to use a competing
forwarder. Conversely, shipments handled by the Company as a forwarder may be
processed by another customs broker selected by the customer.
The Company provides flexible service and seeks to understand the needs of
the customers from points of origin to ultimate destinations. Although the domestic
importer usually designates the logistics company and the services that will
be required, the foreign shipper may also participate in this selection process.
Therefore, the Company coordinates its marketing program to reach both domestic
importers and their overseas suppliers.
The Company’s marketing efforts are focused primarily on the traffic,
shipping and purchasing departments of existing and potential customers. The
district manager of each office is responsible for marketing, sales coordination,
and implementation in the area in which he or she is located. All employees
are responsible for customer service and relations.
The Company staffs its offices largely with managers and other key personnel
who are citizens of the nations in which they operate and who have extensive
experience in global logistics. Marketing and customer service staffs are responsible
for marketing the Company’s services directly to local shippers and traffic
managers who may select or influence the selection of the logistics vendor and
for ensuring that customers receive timely and efficient service. The Company
believes that its expertise in supplying solutions customized to the needs of
its customers, its emphasis on coordinating its origin and destination customer
service and marketing activities, and the incentives it gives to its managers
have been important elements of its success.
Competition
The global logistics services industry is intensely competitive and is expected
to remain so for the foreseeable future. There are a large number of companies
competing in one or more segments of the industry, but the number of firms with
a global network that offer a full complement of logistics services is more
limited. Depending on the location of the shipper and the importer, the Company
must compete against both the niche players and larger entities. While there
is currently a marked trend within the industry toward consolidation into larger
firms striving for immediate multinational and multi-service networks, the regional
and local competitors maintain a strong market presence.
Historically, the primary competitive factors in the global logistics services
industry have been price and quality of service, including reliability, responsiveness,
expertise, convenience, and scope of operations. The Company emphasizes quality
service and believes that its prices are competitive with the prices of others
in the industry. Recently, larger customers have exhibited a trend toward more
sophisticated and efficient procedures for the management of the logistics supply
chain by embracing strategies such as just-in-time inventory management. This
trend has made computerized customer service capabilities a significant factor
in attracting and retaining customers. These computerized customer service capabilities
include customized Electronic Data Interchange, (“EDI”), and on-line
freight tracing and tracking applications. The customized EDI applications allow
the transfer of key information between the customers’ systems and the
Company’s systems. Freight tracing and tracking applications provide customers
with real time visibility to the location, transit time and estimated delivery
time of inventory in transit.
Management believes that the ability to develop and deliver innovative solutions
to meet customers’ increasingly sophisticated information requirements
is a critical factor in the ongoing success of the Company. Accordingly, the
Company has devoted a significant amount of resources towards the maintenance
and enhancement of systems that will meet these customer demands. Management
believes that the Company’s existing systems are competitive with the
systems currently in use by other logistics services companies with which it
competes.
9.5% 