The company said it accrued about $40 million in demurrage fees due to a slowdown in its ability to process port shipments. Another roughly $20 million went to pay for recovery and investigation expenses, along with shipment issues claims when the company’s systems were down.
Expeditors was the target of a cyberattack Feb. 20. It reported the start of a return to normalization Feb. 28, with the systems recovery continuing in the weeks that followed.
“While we believe the bulk of the expenses related to the cyberattack are now behind us, we expect to continue to incur additional expenses related to further system enhancements,” senior vice president and chief financial officer Bradley Powell said in a company update this week.
Expeditors shut down its global operating and accounting systems following the attack, which tamped down on its ability to arrange shipments and provide customs services to customers. The company was also unable to access some of its accounting data.
Seattle-based Expeditors counts 176 offices globally and offers air and ocean freight services, customs brokerage, cargo insurance, warehousing and distribution services to shippers. Customers in the fashion and retail space include The Kooples, Fox Racing Inc. and Herschel Supply Co.
“All of our products suffered as a result of the cyberattack, particularly during the first three weeks after the attack, as we quickly adjusted to a new and unfamiliar operating environment in which our core systems were taken offline to protect our network,” president and CEO Jeffrey Musser said in a statement.
Musser confirmed the company’s core systems are operational and noted Expeditors was able to retain “the vast majority of customers” following the attack.
Expeditors had warned investors in March that the attack could negatively impact its business. However, it came out of the first quarter topping analyst estimates.
The company reported this week first-quarter revenue jumped 46 percent from the year-ago period to $4.7 billion.
Net earnings attributable to shareholders totaled $346 million, up 21 percent from a year ago.
Issues with capacity, demand and labor shortages continue to hamper supply chains.
“None of the issues in the air, on the water or at the ports have appreciably improved or are likely to in 2022,” Musser said.
Once a return to some semblance of normal occurs, that’s expected to impact Expeditors’ financial performance in comparison to the performance levels seen last year, Powell said.
“Supply and demand in both air and ocean are likely to remain out of balance for the foreseeable future, but we would continue to caution that should demand and rates return to pre-pandemic levels—whenever that may be—our revenue, expenses and operating income are likely to decline from the all-time highs that we experienced in 2021,” Powell said.
Expeditors stock was trading up 5.2 percent to $107.98 in afternoon trading Wednesday. The company had a recent market cap of $18.2 billion.