Expeditors International (NYSE: EXPD), one of the largest U.S.-based freight forwarders, reported across-the-board year-over-year gains in the second quarter, with air freight leading a robust performance that drove sharp increases in revenue and profitability. The Seattle-based company operates an asset-light model, arranging freight movement through carrier partnerships rather than owning aircraft or vessels.

Air freight volume, measured in kilos, rose 14% for the quarter, with month-over-month gains accelerating from 13% in April to 14% in May and 15% in June. Ocean freight volumes, measured in forty-foot equivalents, had a softer trajectory — down 9% in April, up 1% in May, and up 9% in June — resulting in a broadly flat performance for the quarter.

Revenue climbed 32% year over year to $3.5 billion, up from $2.65 billion in the prior-year period. Operating income increased 41% to $349.6 million from $247.7 million. Net income per share rose to $2.03 from $1.34 a year earlier.

Expeditors does not hold earnings calls with analysts. CEO Daniel Wall addressed the results in prepared remarks accompanying the earnings release.

"Our excellent performance this quarter, with double-digit growth across most of our products, is demonstrating that our strategy around operational excellence is working and allowing us to take market share," Wall said. "By focusing on increasing growth in each region, product, and district, we generated tremendous growth and diversification. Our sales, account management, and operations teams all executed extremely well globally this quarter to drive and support this momentum."

Air Freight Demand Outstrips Capacity

The strong air freight performance came amid what Wall described as "highly elevated" buy and sell rates, "as demand for air capacity continued to outweigh available space, particularly late in the quarter."

Wall noted that the Middle East conflict reduced the number of passenger flights capable of carrying air cargo, leading to "constrained belly capacity." He also pointed to robust demand from "hyperscalers" — the operators of large-scale cloud systems and the data centers that support them. The largest cloud providers, including Amazon Web Services, Microsoft Azure, Google Cloud, and Meta, have been investing tens of billions of dollars annually in data center infrastructure to support growing cloud computing and artificial intelligence workloads, driving demand for specialized freight services to move servers and networking equipment.

"We have seen increased demand for freighter space, as some hyperscalers are requiring upper-deck access for their servers," Wall said.

Ocean Freight Shows Signs of Stabilization

Despite a weak start to the quarter, ocean freight volume rose 7% sequentially compared with the first quarter. Global container shipping has experienced significant volatility over the past two years, with volumes and rates affected by Red Sea disruptions that rerouted vessels away from the Suez Canal, ongoing carrier capacity management, and shifting trade flows.

"We may be starting to see a flattening of the long downturn in the ocean market," Wall said.

Per-container profitability improved in the second quarter, driven by "heightened pricing late in the quarter."

Customs Business Benefits from Tariff Complexity

Expeditors' customs forwarding business continued to benefit as shippers navigated complex and shifting tariff regimes. For asset-light forwarders like Expeditors, customs brokerage and trade compliance services tend to see heightened demand when trade policy is in flux, as importers and exporters rely on forwarding expertise to manage compliance and routing decisions.

"Our customs business benefited from tariff-related complexity, along with solid growth from new customers and increased declarations from existing customers," Wall said. He added that a "temporary surge" in activity was tied to tariffs imposed under the Trump administration's International Emergency Economic Powers Act (IEEPA), which were ruled illegal by the Supreme Court.

Cost Structure

Transportation costs increased 38%, outpacing the 32% revenue growth. However, salaries and other operating expenses rose just 13%, contributing to the overall improvement in profitability.

Share Performance

Expeditors shares were up approximately 2.8% at around 11:15 a.m. Tuesday following the earnings release. According to Barchart, the stock has gained 4.57% over the past month, 25.43% over three months, and 49.9% over the trailing 52 weeks.