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China Coronavirus Rebound Encouraging For Global Freight, Descartes CEO Says


The surprising rebound of China freight volumes could bode well for the impact of the coronavirus epidemic on global supply chains, the CEO of Descartes Systems Group (NASDAQ: DSGX) said as the Canadian logistics technology company reported robust increases in profits and revenue in the fourth quarter.

"We were pleasantly surprised at how quickly the supply chains got back to full movement," CEO Edward Ryan told analysts Wednesday, citing multimodal activity on Descartes' global network in late February.

China's recovery is "somewhat encouraging" for the impact of coronavirus on freight elsewhere, Ryan said. So far, Descartes' network has yet to show any troubling volume movements elsewhere linked to the epidemic, he said.

But he stressed that the situation could change since uncertainties of the epidemic's impact remain significant.

"I don't have a crystal ball for how the coronavirus will unfold," he said.

Ryan made the comments after Descartes reported net income of $11.4 million, or 13 cents per share, on $325.8 million in revenue for the fourth quarter of fiscal year 2020. The results came in slightly above analysts' expectations of 12 cents per share.

Net income grew by 44% and revenue grew by 19% compared to the fourth quarter of fiscal year 2019.

Descartes' prospects for the year remain solid, Ryan said. He noted that "customers will need us more than ever" with numerous challenges for supply chains, including coronavirus.

"We've done pretty well in these environments," he said.

Ontario-based Descartes is primarily a software-as-a-service provider. It offers an array of solutions for carriers, logistics providers, shippers and government entities.

The company acquired Peoplevox, a cloud-based e-commerce warehouse management provider, in February.

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