Expeditors International of Washington Inc. History

Address:

19119 16th Avenue South
Seattle, Washington 98188
U.S.A.

Telephone: (206) 246-3711
Fax: (206) 246-3197

Public Company
Incorporated: 1979
Employees: 2,500
Sales: $584.6 million (1995)
Stock Exchanges: NASDAQ
SICs: 4731 Freight Transportation Arrangement

Company Perspectives:

The company's mission is to set the standard for excellence in global logistics through the total commitment to quality in people and services, with superior financial results.

Company History:

A fast-growing shipping services company, Expeditors International of Washington Inc. provides international freight-forwarding and customs-clearance services to large, globally-oriented corporations through a vast network of sales offices scattered across six continents. Expeditors robust pace of financial growth began during the early 1980s when the company started providing both freight-forwarding and customs-brokerage services, a novel concept at the time for companies involved in coordinating international cargo transportation. Propped up by its ability to orchestrate the transportation of cargo and clear such cargo through customs, Expeditors recorded animated growth during the 1980s and the first half of the 1990s as customers increasingly sought the aid of full-service shippers.

Origins of a Unique Shipping Services Company

Expeditors' history was shaped not by the company's founders but through the vision of Peter J. Rose. Rose, a Canadian-born son of a National Express employee who spent his life in the shipping business, and four of his colleagues, Kevin Walsh, Glenn Alger, Robert Chiarito, and James Wang, each of whom shared experience in the business of shipping freight, changed the business focus of Expeditors. But from the group, Rose emerged as the prominent, guiding personality. More than a decade after the incorporation of Expeditors, one industry observer noted that the company mirrored the personality of the person chiefly responsible for its enviable record of financial growth, Peter Rose.

Rose was born in Montreal, Quebec, and, as the story went, entered the vocation that would occupy his professional career at the age of five when he donned his father's cap and delivered packages door-to-door. As a young adult, Rose attended Sir George Williams University, then after shelving dreams of becoming a professional hockey player, embarked on his career when he went to work for Canadian Pacific. Rose's entry into the transportation field would define his working life in the decades to follow, but his greatest success would be achieved in the United States where Rose accumulated the experience that eventually predicated Expeditors' existence. Rose arrived in the United States in 1965 and immediately began working as the Inward Traffic Manager for Compass Agencies, a steamship agent. From there, Rose went on to work for other companies involved in the transportation business, serving short stints at Harper and Circle Airfreight. Rose finished his long-served apprenticeship in the freight-forward business by the late 1970s, and from the 1980s Rose orchestrated the growth of a unique shipping services company.

After joining Circle Airfreight in 1975, Rose returned to Harper, where he and several other Harper executives discussed the possibilities of creating a superior and unique type of shipping service for the corporate world. The business approach discussed by these Harper executives was simple yet novel. They resolved to fuse the functions of a freight-forwarding company and a custom-house broker at a time when other shipping services companies either shipped cargo or facilitated the clearance of cargo through customs, but rarely offered both services. By offering both services, Rose and his other Harper executives could offer the full gamut of services sought by international, blue-chip corporations. "We wanted to take big freight," Rose later explained in a hypothetical example, "and be able to move it from the door in Hong Kong to the door in Minneapolis," which the company did, but without its own transportation equipment. Instead, the handful of Harper executives planned to move cargo via other companies' transportation equipment, ensuring that the cargo moved through customs speedily and reached its ultimate destination.

Once the plans for this door-to-door, customs-clearance, and freight-forwarding company were finalized by Rose and his associates, during a late-night drinking session on the island of Lantau, the course was set for a new force in the shipping services industry. That night, on the island near Hong Kong, the talks transformed into action. In 1981, the group joined Expeditors, a company with an office in Seattle that had been founded two years earlier. Rose was immediately named Executive Vice President of Expeditors, and before the year was through sales offices were established in San Francisco, Chicago, Hong Kong, Taipei, and Singapore.

Despite its far-ranging sales offices, the company was a contrastingly modest enterprise during the early days following the arrival of Rose and the other Harper executives. As Rose would later reflect, Expeditors was a modestly-sized enterprise during the early 1980s, "almost that proverbial phone booth and a note pad," he later remembered. Though the company grew quickly and swiftly became the leading U.S.-based airfreight importer from the Far East, it did not lose the lean and focused quality to its operations that described Expeditors during the early years of the decade. Operating without ownership of any transportation equipment or any of the attendant responsibilities of owning capital equipment, Expeditors focused on service, service that attracted the business of the nation's largest corporations who appreciated the benefits a genuine full-service shipper could provide. The business strategy formulated by Rose and his colleagues worked, and worked unexpectedly well, prompting Rose, more than a decade after he joined Expeditors, to confide, "I wouldn't have believed we could've done this ... we created this monster; it has to be fed."

Robust Growth Begins in Early 1980s

Rose fed the "monster" by entering the export market in 1982 and the ocean freight market in 1985. Sandwiched in between these two diversifying moves was Expeditors' initial public offering in 1984, which was completed in September and yielded the company the financial resources to expand its operations on a worldwide basis. Though the trappings at Expeditors' headquarters near Seattle-Tacoma International Airport (Sea-Tac) remained unassuming throughout its explosive rise in the shipping industry, the company's network of international sales offices grew increasingly formidable. In the wake of the 1984 conversion to public ownership, Expeditors grew vigorously, adding sales offices in the Far East, where the company first had distinguished itself, and by branching out into other overseas markets. The company entered the expansive European market in 1986, with an office in London, and continued to flesh out its network of foreign offices as the decade progressed.

As Expeditors recorded exponential financial growth during the latter half of the 1980s, the company began to attract the attention of industry observers and the mainstream business press. Inc. magazine ranked Expeditors as one of the 100 fastest growing companies in the United States in 1987 and other testaments to the company's prolific growth were soon to follow. By 1988, sales had been increasing at a rate of more than 50 percent during the previous five years, fueled by the business garnered from clients such as Apple Computer, IBM, Nike, and Motorola who helped Expeditors generate nearly $150 million that year. By the end of the following year, when the company's number of sales offices had increased to 22, annual sales neared $200 million, a volume derived from 42 countries.

Growth in the 1990s

Entering the 1990s, Expeditors' global reach was extensive, extending across the world and enabling the company to meet the variegated shipping needs of large, international companies. Though much had been achieved during the 1980s, the company's growth during the 1990s would overshadow the accomplishments of Expeditors' inaugural decade of business as a freight-forwarder and customs-house broker. As if anticipating the rapid growth to come during the 1990s, the company expanded its headquarters near Sea-Tac during the early months of 1990, increasing the square footage at its executive offices from 13,000 to 26,000, then set about expanding its network of sales offices as well. In 1991, the company opened an office in Kuwait and placed representatives in offices in Istanbul, Cairo, Athens, and Dubai. Expeditors also opened an office in Antwerp, Belgium, two offices in Portugal, and four offices in Germany. On the domestic front, the company expanded as well, establishing new offices in Louisville, Kentucky, and Phoenix, Arizona. The spate of new office additions enabled Expeditors to generate a record $254 million in revenue in 1991 and an unprecedented $10.2 million in earnings, the bulk of which was earmarked for financing further expansion, as were the profits from earlier years.

Focused on growth and service, Expeditors grew rapidly during the early 1990s, winning customers from its competitors with its capacity as a dual shipping service provider and earning praise from the business press. The company was selected as one of Forbes' 200 best small companies in the United States in 1990 and again in 1992. Not lost on the industry pundits who lauded Expeditors' innovative business strategy and its financial vitality was the company's performance during the economically recessive early 1990s, a time when the Sea-Tac-based shipper was growing by leaps and bounds. As many businesses reeled from the stifling affects of waning consumer confidence and bleak economic forecasts, Expeditors surged ahead and opened 14 new sales offices in 1992, helping the company post $333.2 million in sales and $11.3 million in earnings.

Financial growth continued unabated in 1993, when Expeditors generated $361.4 million in sales and more than $10 million in earnings, although the company's physical pace of growth slowed in comparison to 1992. After establishing 14 new sales offices in 1992--most of which were located in Europe and Asia--the company opened only four new offices in 1993, but its coveted ability to coordinate cargo movement and consolidate shipments to win low rates pushed revenues upward, nonetheless. As 1994 began, Expeditors moved resolutely forward with its expansion program, opening two new sales offices each in Sweden, Spain, and South Africa early in the year. An office in New Delhi was opened in March, with an office in Bombay slated to open by the end of the year.

In addition to the company's expansion of its sales office network, Expeditors was also diversifying the value-added services it provided to its customers by signing long-term contracts for customs brokerage and by making its foray into distribution. The company's first customer in the distribution business was Koss Corp., for whom Expeditors agreed to distribute imported headphones throughout the United States. Expeditors' customs-brokerage operations, meanwhile, received a substantial boost in business when the company signed a contract with retailer Montgomery Ward in early 1994. Under the terms of the contract, Expeditors was expected to clear imported merchandise through customs for Montgomery Ward's 360 retail stores, with the bulk of the activity to take place in the Los Angeles area. Growing and diversifying on all fronts, Expeditors entered the mid-1990s with sanguine hopes, an optimism that prevailed not only at the company's headquarters but outside the company as well. Noting Expeditors' strategic expansion and its evolution as a freight forwarder and customs broker, one industry analyst remarked to a reporter for the Puget Sound Business Journal, "It's becoming a global company. They're diversifying well geographically and I think they're doing a good job of diversifying away from import air freight. I think they're in a good position to benefit from worldwide economic recovery."

Future Growth

Twelve new sales office were opened in 1994, with another six slated to open in 1995, as Expeditors continued to broaden its presence overseas. China was considered as one of the important markets for the company as it prepared for the late 1990s and looked to sustain its consistent, record-setting pace of financial growth, with markets in South America and India offering strong opportunities for future growth as well. Annual sales, which in 1995 totaled $584.6 million, had been increasing 25 percent to 30 percent annually during the 1990s, setting the stage for commensurate growth during the latter half of the decade.

As the company headed toward the late 1990s, with 25 percent to 30 percent annual increases in sales projected through the year 2000, Rose was confident that Expeditors' future would be as profitable as its past, prompting him to promise that he and the company's more than 2,400 employees would "continue on in our boringly consistent manner." Whether or not the company's financial growth would continue to be "boringly consistent" in the future remained to seen, but considering Expeditors' record of physical expansion during its first decade-and-a-half of business, progress appeared to be inevitable as Rose and other executives set their sights on new and potentially lucrative markets. With sales operations on six continents and more than 100 offices worldwide during the mid-1990s, the company still had room to grow as it embarked on its future course, intent on securing its position as one of America's leading shipping services companies.

Principal Subsidiaries: E.I. Freight Canada, Ltd.; E.I. Freight (H.K.) Ltd. (Hong Kong); E.I. Freight SDN. BHD. (Malaysia); E.I. Freight (USA) Inc.; Expeditors International Philippines Inc. (60%); Expeditors International (U.K.) Ltd. (England); Expeditors Overseas Mgt. (H.K.) Ltd. (Hong Kong); Expeditors Private Ltd. (Singapore); Expeditors International Pty. Ltd. (Australia) (50%); Expeditors International Sverige AB (Sweden); Pac Bridge International Ltd. (Hong Kong); Pac Bridge Shipping, Ltd.

Expeditors International of Washington Inc. History

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