Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At November ~~2, 2020,~~1, 2021, the number of shares outstanding of the issuer’s common stock was 169,403,822 ~~169,265,692.~~.

	September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents	$	1,465,510		$	1,230,491		$	1,820,106		$	1,527,791
Accounts receivable, less allowance for credit loss of $5,171 at September 30, 2020 and $11,143 at December 31, 2019		1,582,424			1,315,091
Accounts receivable, less allowance for credit loss of $7,285 at September 30, 2021 and $5,579 at December 31, 2020								3,330,398			1,998,055
Deferred contract costs		232,351			131,783			841,689			327,448
Other		129,617			92,558			119,346			110,250
Total current assets		3,409,902			2,769,923			6,111,539			3,963,544
Property and equipment, less accumulated depreciation and amortization of $510,103 at September 30, 2020 and $478,906 at December 31, 2019		499,189			499,344
Property and equipment, less accumulated depreciation and amortization of $533,450 at September 30, 2021 and $516,988 at December 31, 2020								491,577			506,425
Operating lease right-of-use assets		422,002			390,035			448,228			432,723
Goodwill		7,927			7,927			7,927			7,927
Deferred federal and state income taxes, net		3,130			8,034
Other assets, net		16,404			16,621			17,112			16,884
Total assets	$	4,358,554		$	3,691,884		$	7,076,383		$	4,927,503
Liabilities:
Current Liabilities:
Accounts payable	$	888,761		$	735,695		$	1,806,977		$	1,136,859
Accrued expenses, primarily salaries and related costs		236,826			189,446
Accrued liabilities, primarily salaries and related costs								342,151			257,021
Contract liabilities		267,266			154,183			977,660			379,722
Current portion of operating lease liabilities		70,755			65,367			81,362			74,004
Federal, state and foreign income taxes		33,100			23,627			67,332			45,437
Total current liabilities		1,496,708			1,168,318			3,275,482			1,893,043
Noncurrent portion of operating lease liabilities		357,373			326,347			374,658			364,185
Deferred federal and state income taxes, net								5,651			7,048
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, NaN issued		0		0				0			0
Common stock, par value $0.01 per share. Issued and outstanding: 169,231 shares at September 30, 2020 and 169,622 shares at December 31, 2019		1,692			1,696
Common stock, par value $0.01 per share. Issued and outstanding: 169,392 shares at September 30, 2021 and 169,294 shares at December 31, 2020								1,694			1,693
Additional paid-in capital		145,924			3,203			74,925			157,496
Retained earnings		2,489,694			2,321,316			3,463,539			2,600,201
Accumulated other comprehensive loss		(135,281	)		(131,187	)		(122,800	)		(99,753	)
Total shareholders’ equity		2,502,029			2,195,028			3,417,358			2,659,637
Noncontrolling interest		2,444			2,191			3,234			3,590
Total equity		2,504,473			2,197,219			3,420,592			2,663,227
Total liabilities and equity	$	4,358,554		$	3,691,884		$	7,076,383		$	4,927,503

	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Revenues:
Airfreight services	$	1,093,550	$	715,450	$	3,237,179	$	2,171,928	$	1,628,115	$	983,199	$	4,477,599	$	2,908,451
Ocean freight and ocean services		612,858		585,374		1,597,997		1,697,824		1,598,597		609,816		3,651,059		1,590,541
Customs brokerage and other services		758,389		774,031		2,112,117		2,260,733		1,092,549		755,698		2,998,516		2,104,566
Total revenues		2,464,797		2,074,855		6,947,293		6,130,485		4,319,261		2,348,713		11,127,174		6,603,558
Operating Expenses:
Airfreight services		833,689		522,868		2,450,931		1,574,717		1,244,381		723,340		3,335,253		2,122,205
Ocean freight and ocean services		455,072		424,215		1,185,154		1,234,845		1,254,334		452,028		2,859,020		1,177,696
Customs brokerage and other services		441,657		453,416		1,212,102		1,330,758		686,775		438,966		1,837,134		1,204,551
Salaries and related		373,613		356,331		1,110,760		1,069,592		519,611		373,613		1,452,902		1,110,760
Rent and occupancy		42,484		41,987		126,383		124,407		46,730		42,484		137,376		126,383
Depreciation and amortization		15,851		12,386		42,620		38,456		12,753		15,851		38,415		42,620
Selling and promotion		2,945		10,133		14,301		32,852		4,237		2,945		10,479		14,301
Other		47,541		46,969		146,416		138,506		60,803		47,541		170,798		146,416
Total operating expenses		2,212,852		1,868,305		6,288,667		5,544,133		3,829,624		2,096,768		9,841,377		5,944,932
Operating income		251,945		206,550		658,626		586,352		489,637		251,945		1,285,797		658,626
Other Income (Expense):
Interest income		1,504		5,501		8,870		18,123		2,462		1,504		6,596		8,870
Other, net		980		1,895		5,161		5,822		733		980		6,382		5,161
Other income, net		2,484		7,396		14,031		23,945		3,195		2,484		12,978		14,031
Earnings before income taxes		254,429		213,946		672,657		610,297		492,832		254,429		1,298,775		672,657
Income tax expense		62,710		53,319		173,968		156,029		132,922		62,710		333,941		173,968
Net earnings		191,719		160,627		498,689		454,268		359,910		191,719		964,834		498,689
Less net earnings attributable to the noncontrolling interest		412		406		1,169		1,199		842		412		2,174		1,169
Net earnings attributable to shareholders	$	191,307	$	160,221	$	497,520	$	453,069	$	359,068	$	191,307	$	962,660	$	497,520
Diluted earnings attributable to shareholders per share	$	1.12	$	0.92	$	2.92	$	2.60	$	2.09	$	1.12	$	5.61	$	2.92
Basic earnings attributable to shareholders per share	$	1.14	$	0.94	$	2.96	$	2.65	$	2.12	$	1.14	$	5.68	$	2.96
Weighted average diluted shares outstanding		170,735		173,483		170,539		174,463		171,565		170,735		171,549		170,539
Weighted average basic shares outstanding		168,310		170,415		167,942		171,084		169,633		168,310		169,398		167,942

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Net earnings	$	191,719		$	160,627		$	498,689		$	454,268		$	359,910		$	191,719		$	964,834		$	498,689
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax expense (benefit) of $4,200 and $(5,803) for the three months ended September 30, 2020 and 2019 and $226 and $(5,364) for the nine months ended September 30, 2020 and 2019		17,429			(14,603	)		(5,010	)		(14,007	)
Reclassification adjustments for foreign currency realized losses, net of tax of $145 for the nine months ended September 30, 2019		0			0			0			535
Other comprehensive income (loss)		17,429			(14,603	)		(5,010	)		(13,472	)
Foreign currency translation adjustments, net of income tax (benefit) expense of ($1,592) and $4,200 for the three months ended September 30, 2021 and 2020 and ($4,764) and $226 for the nine months ended September 30, 2021 and 2020														(16,908	)		17,429			(23,946	)		(5,010	)
Other comprehensive (loss) income														(16,908	)		17,429			(23,946	)		(5,010	)
Comprehensive income		209,148			146,024			493,679			440,796			343,002			209,148			940,888			493,679
Less comprehensive (loss) income attributable to the noncontrolling interest		(36	)		481			253			1,020
Less comprehensive income (loss) attributable to the noncontrolling interest														668			(36	)		1,275			253
Comprehensive income attributable to shareholders	$	209,184		$	145,543		$	493,426		$	439,776		$	342,334		$	209,184		$	939,613		$	493,426

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Operating Activities:
Net earnings	$	191,719		$	160,627		$	498,689		$	454,268		$	359,910		$	191,719		$	964,834		$	498,689
Adjustments to reconcile net earnings to net cash from operating activities:
Provisions for losses on accounts receivable		398			757			4,607			453			3,739			398			6,028			4,607
Deferred income tax (benefit) expense		(1,276	)		(5,822	)		2,872			(17	)		(7,658	)		(1,276	)		2,343			2,872
Stock compensation expense		12,297			12,155			45,091			49,361			15,204			12,297			57,298			45,091
Depreciation and amortization		15,851			12,386			42,620			38,456			12,753			15,851			38,415			42,620
Other, net		2,919			652			3,470			812			626			2,919			1,523			3,470
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(106,065	)		43,885			(274,440	)		246,175
Increase (decrease) in accounts payable and accrued expenses		94,263			(58,816	)		201,940			(141,199	)
(Increase) decrease in deferred contract costs		(81,486	)		10,301			(99,887	)		28,550
Increase (decrease) in contract liabilities		91,638			(13,211	)		112,244			(36,933	)
(Decrease) in income taxes payable, net		(41,286	)		(671	)		(10,644	)		(33,284	)
(Increase) decrease in other, net		(17,373	)		(744	)		(13,242	)		47
Increase in accounts receivable														(714,300	)		(106,065	)		(1,377,997	)		(274,440	)
Increase in accounts payable and accrued liabilities														436,343			94,232			769,525			201,929
Increase in deferred contract costs														(328,932	)		(81,486	)		(550,572	)		(99,887	)
Increase in contract liabilities														381,192			91,638			635,286			112,244
Increase (decrease) in income taxes payable, net														33,378			(41,286	)		32,022			(10,644	)
Increase in other, net														(14,884	)		(17,373	)		(15,208	)		(13,242	)
Net cash from operating activities		161,599			161,499			513,320			606,689			177,371			161,568			563,497			513,309
Investing Activities:
Purchase of property and equipment		(9,178	)		(15,521	)		(37,419	)		(37,943	)		(9,870	)		(9,178	)		(24,800	)		(37,419	)
Other, net		1,174			232			963			1,525			(157	)		1,174			(53	)		963
Net cash from investing activities		(8,004	)		(15,289	)		(36,456	)		(36,418	)		(10,027	)		(8,004	)		(24,853	)		(36,456	)
Financing Activities:
Proceeds from borrowing on lines of credit, net														7,479			31			7,568			11
Proceeds from issuance of common stock		121,430			60,713			174,016			120,190			56,965			121,430			99,433			174,016
Repurchases of common stock		—			(61,999	)		(314,225	)		(296,922	)		(76,595	)		—			(225,064	)		(314,225	)
Dividends paid		—			—			(86,815	)		(85,184	)		—			—			(98,387	)		(86,815	)
Payments for taxes related to net share settlement of equity awards		—			—			(10,566	)		(6,674	)		(4	)		—			(15,172	)		(10,566	)
Distribution to noncontrolling interest														(1,631	)		—			(1,631	)		—
Net cash from financing activities		121,430			(1,286	)		(237,590	)		(268,590	)		(13,786	)		121,461			(233,253	)		(237,579	)
Effect of exchange rate changes on cash and cash equivalents		10,030			(11,604	)		(4,255	)		(9,446	)		(7,573	)		10,030			(13,076	)		(4,255	)
Change in cash and cash equivalents		285,055			133,320			235,019			292,235			145,985			285,055			292,315			235,019
Cash and cash equivalents at beginning of period		1,180,455			1,082,650			1,230,491			923,735			1,674,121			1,180,455			1,527,791			1,230,491
Cash and cash equivalents at end of period	$	1,465,510		$	1,215,970		$	1,465,510		$	1,215,970		$	1,820,106		$	1,465,510		$	1,820,106		$	1,465,510
Taxes Paid:
Income taxes	$	106,434		$	61,201		$	180,242		$	196,169		$	104,617		$	106,434		$	295,153		$	180,242

	Common Stock																								Common Stock
For the three months ended September 30, 2020 and 2019	Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
For the three months ended September 30, 2021 and 2020																									Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at June 30, 2021																										169,169		$	1,692		$	79,357		$	3,104,471		$	(106,066	)	$	3,079,454		$	4,197		$	3,083,651
Shares issued under employee stock plans																										836			8			56,953			—			—			56,961			—			56,961
Shares repurchased under provisions of stock repurchase plan																										(613	)		(6	)		(76,589	)		—			—			(76,595	)		—			(76,595	)
Stock compensation expense																										—			—			15,204			—			—			15,204			—			15,204
Net earnings																										—			—			—			359,068			—			359,068			842			359,910
Other comprehensive income loss																										—			—			—			—			(16,734	)		(16,734	)		(174	)		(16,908	)
Distribution to noncontrolling interest																										—			—			—			—			—			—			(1,631	)		(1,631	)
Balance at September 30, 2021																										169,392		$	1,694		$	74,925		$	3,463,539		$	(122,800	)	$	3,417,358		$	3,234		$	3,420,592

Balance at June 30, 2020		166,816		$	1,668		$	12,221		$	2,298,387		$	(153,158	)	$	2,159,118		$	2,480		$	2,161,598			166,816		$	1,668		$	12,221		$	2,298,387		$	(153,158	)	$	2,159,118		$	2,480		$	2,161,598
Shares issued under employee stock plans		2,415			24			121,406			—			—			121,430			—			121,430			2,415			24			121,406			—			—			121,430			—			121,430
Stock compensation expense		—			—			12,297			—			—			12,297			—			12,297			—			—			12,297			—			—			12,297			—			12,297
Net earnings		—			—			—			191,307			—			191,307			412			191,719			—			—			—			191,307			—			191,307			412			191,719
Other comprehensive income (loss)		—			—			—			—			17,877			17,877			(448	)		17,429
Other comprehensive income loss																										—			—			—			—			17,877			17,877			(448	)		17,429
Balance at September 30, 2020		169,231		$	1,692		$	145,924		$	2,489,694		$	(135,281	)	$	2,502,029		$	2,444		$	2,504,473			169,231		$	1,692		$	145,924		$	2,489,694		$	(135,281	)	$	2,502,029		$	2,444		$	2,504,473

Balance at June 30, 2019		170,040		$	1,701		$	12,433		$	2,140,935		$	(104,096	)	$	2,050,973		$	1,421		$	2,052,394
																									Common Stock
For the nine months ended September 30, 2021 and 2020																									Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at December 31, 2020																										169,294		$	1,693		$	157,496		$	2,600,201		$	(99,753	)	$	2,659,637		$	3,590		$	2,663,227
Shares issued under employee stock plans		1,095			11			60,702			—			—			60,713			—			60,713			2,136			21			84,240			—			—			84,261			—			84,261
Shares repurchased under provisions of stock repurchase plans		(892	)		(10	)		(61,989	)		—			—			(61,999	)		—			(61,999	)		(2,038	)		(20	)		(225,044	)		—			—			(225,064	)		—			(225,064	)
Stock compensation expense		—			—			12,155			—			—			12,155			—			12,155			—			—			57,298			—			—			57,298			—			57,298
Net earnings		—			—			—			160,221			—			160,221			406			160,627			—			—			—			962,660			—			962,660			2,174			964,834
Other comprehensive income (loss)		—			—			—			—			(14,678	)		(14,678	)		75			(14,603	)		—			—			—			—			(23,047	)		(23,047	)		(899	)		(23,946	)
Balance at September 30, 2019		170,243		$	1,702		$	23,301		$	2,301,156		$	(118,774	)	$	2,207,385		$	1,902		$	2,209,287
Dividends paid ($0.58)																										—			—			935			(99,322	)		—			(98,387	)		—			(98,387	)
Distribution to noncontrolling interest																										—			—			—			—			—			—			(1,631	)		(1,631	)
Balance at September 30, 2021																										169,392		$	1,694		$	74,925		$	3,463,539		$	(122,800	)	$	3,417,358		$	3,234		$	3,420,592


	Common Stock
For the nine months ended September 30, 2020 and 2019	Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at December 31, 2019		169,622		$	1,696		$	3,203		$	2,321,316		$	(131,187	)	$	2,195,028		$	2,191		$	2,197,219			169,622		$	1,696		$	3,203		$	2,321,316		$	(131,187	)	$	2,195,028		$	2,191		$	2,197,219
Cumulative effect of accounting change		—			—			—			6,074			—			6,074			—			6,074			—			—			—			6,074			—			6,074			—			6,074
Shares issued under employee stock plans		4,009			40			163,410			—			—			163,450			—			163,450			4,009			40			163,410			—			—			163,450			—			163,450
Shares repurchased under provisions of stock repurchase plans		(4,400	)		(44	)		(66,780	)		(247,401	)		—			(314,225	)		—			(314,225	)		(4,400	)		(44	)		(66,780	)		(247,401	)		—			(314,225	)		—			(314,225	)
Stock compensation expense		—			—			45,091			—			—			45,091			—			45,091			—			—			45,091			—			—			45,091			—			45,091
Net earnings		—			—			—			497,520			—			497,520			1,169			498,689			—			—			—			497,520			—			497,520			1,169			498,689
Other comprehensive income (loss)		—			—			—			—			(4,094	)		(4,094	)		(916	)		(5,010	)		—			—			—			—			(4,094	)		(4,094	)		(916	)		(5,010	)
Dividends paid ($0.52)		—			—			1,000			(87,815	)		—			(86,815	)		—			(86,815	)		—			—			1,000			(87,815	)		—			(86,815	)		—			(86,815	)
Balance at September 30, 2020		169,231		$	1,692		$	145,924		$	2,489,694		$	(135,281	)	$	2,502,029		$	2,444		$	2,504,473			169,231		$	1,692		$	145,924		$	2,489,694		$	(135,281	)	$	2,502,029		$	2,444		$	2,504,473

Balance at December 31, 2018		171,582		$	1,716		$	1,896		$	2,088,707		$	(105,481	)	$	1,986,838		$	882		$	1,987,720
Shares issued under employee stock plans		2,751			28			113,488			—			—			113,516			—			113,516
Shares repurchased under provisions of stock repurchase plans		(4,090	)		(42	)		(141,847	)		(155,033	)		—			(296,922	)		—			(296,922	)
Stock compensation expense		—			—			49,361			—			—			49,361			—			49,361
Net earnings		—			—			—			453,069			—			453,069			1,199			454,268
Other comprehensive income (loss)		—			—			—			—			(13,293	)		(13,293	)		(179	)		(13,472	)
Dividends paid ($0.50)		—			—			403			(85,587	)		—			(85,184	)		—			(85,184	)
Balance at September 30, 2019		170,243		$	1,702		$	23,301		$	2,301,156		$	(118,774	)	$	2,207,385		$	1,902		$	2,209,287

Expeditors International of Washington, Inc. (the Company) is a non-asset based provider of global logistics services operating through a worldwide network of offices and exclusive or non-exclusive agents. The Company’s customers include retailing and wholesaling, technology, industrial and manufacturing companies around the world.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As a result, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted. The Company believes that the disclosures made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Form 10-K as filed with the Securities and Exchange Commission on February ~~21, 2020.~~19, 2021.

All significant intercompany accounts and transactions have been eliminated in consolidation. All dollar amounts in the notes are presented in thousands except for per share data or unless otherwise specified. Certain prior year amounts have been reclassified to conform to the current year presentation, including revisions to correct for immaterial errors. See Note 9 for further information.

The Company derives its revenues by entering into agreements that are generally comprised of a single performance obligation, which is that freight is shipped for and received by the customer. The Company's three principal services are the revenue categories presented in the condensed consolidated statements of earnings: 1) airfreight services, 2) ocean freight and ocean services, and 3) customs brokerage and other services.

The Company typically satisfies its performance obligations as services are rendered over time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed over the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one to two month-period and contracts with customers have an original expected duration of less than one year. The Company satisfied nearly all performance obligations for the contract liabilities recorded as of June 30, ~~2020.~~2021.

Beginning in the second quarter 2019, the Company revised its presentation for revenue transfers between its geographic operating segments and services rendered at the destination, which moved certain revenues and directly related operating expenses for air and ocean transactions to destination services within customs brokerage and other services. These changes better align revenue reporting with the location where the services are performed, as well as the transactional reporting being developed as part of the Company’s new accounting systems and processes. The change in presentation had no impact on consolidated or segment operating income. The impact on reported consolidated and segment total revenues and expenses for these changes was immaterial and nine months ended September 30, 2019 presentation has not been revised.

The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. All ROU assets and lease liabilities are recognized at the commencement date at the present value of lease payments over the lease term. ROU assets are adjusted for lease incentives and initial direct costs. The lease term includes renewal options exercisable at the Company's sole discretion when the Company is reasonably certain to exercise that option. As the Company's leases generally do not have an implicit rate, the Company uses an estimated incremental borrowing rate based on market information available at the commencement date to determine the present value. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. The Company excludes variable payments from ROU assets and lease liabilities, to the extent not considered fixed, and instead expenses variable payments as incurred. Lease expense is recognized on a straight-line basis over the lease term and is included in rent and occupancy expenses in the condensed consolidated statement of earnings.

Effective January 1, 2020, the Company adopted a new accounting standard update related to the measurement of credit losses on financial instruments. The adoption had an immaterial effect on the Company’s consolidated financial statements and disclosures. Under this new standard, the valuation allowance reduces a financial asset’s balance for credit losses expected to be incurred over the asset’s contractual term. The Company determined that this new guidance is applicable to its accounts receivable, which are short term and for which the Company has not historically experienced significant credit losses. The Company adopted this standard using the modified retrospective transition method resulting in a ~~$6 millionadjustment to the opening balance of retained earnings and an $8 million reduction to the opening balance of allowance for credit loss.~~ The Company’s trade accounts receivable present similar credit risk characteristics and the allowance for credit loss is estimated on a collective basis, using a credit loss-rate method leveraging historical credit loss information and including considerations of the current economic environment. Additional allowances may be necessary in the future if changes in economic conditions are ~~significant~~significant enough to affect expected credit losses. The Company has recorded an allowance for credit loss in the amounts of $~~5,171~~7,285 as of September 30, ~~2020~~2021 and ~~$11,143~~$5,579 as of December 31, ~~2019.~~2020. Additions and write-offs have not been significant in the periods presented.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and ~~disclosures~~disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The Company uses estimates primarily in the following areas: accounts receivable valuation, accrual of costs related to ancillary services the Company provides, self-insured liabilities, accrual of various tax liabilities ~~and contingencies~~ including estimates associated with the U.S. enacted Tax Cuts and Jobs Act (the 2017 Tax Act), accrual of loss contingencies, ~~the allocation of the purchase price in a business combination,~~ calculation of share-based compensation expense and estimates related to determining the lease term and discount rate when measuring ROU assets and lease liabilities. Actual results could be materially different from the estimated provisions and accruals recorded.

In December 2019, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also clarifies and amends existing guidance to improve consistent application among reporting entities. This standard will become effective for the Company on January 1, 2021. The Company is currently evaluating the impact of this standard and does not expect it to have a material impact on the Company’s consolidated financial statements and disclosures.

The Company has historically granted the majority of its share-based awards during the second quarter of each fiscal year. On May 5, 2020, shareholders approved the Amended and Restated 2017 Omnibus Incentive Plan (Amended 2017 Plan), which made available 5.5 million shares of the Company’s common stock to be issued under all award types allowed by the Amended 2017 Plan.

During the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company awarded ~~511~~307 and ~~462~~511 restricted stock units (RSUs), respectively. ~~These~~The RSUs were granted ~~to employees~~ at a weighted-average fair value of $113.82 in 2021 and $74.21 in ~~2020 and $75.73 in 2019.~~2020. The RSUs vest annually over 3 years based on continued employment and are settled upon vesting in shares of the Company's common stock on a 1-for-1 basis. The value of an RSU award is based on the Company's stock price on the date of grant. Additionally, in 2021 and 2020, 13 and ~~2019,~~ 19 ~~and 24~~ fully vested RSUs were granted to non-employee directors, ~~respectfully.~~respectively.

The Company also awarded 9575 and 9695 performance stock units (PSUs) in ~~2020~~2021 and ~~2019,~~2020, respectively. Outstanding PSUs include performance conditions to be finally measured in ~~2020,~~ 2021, 2022 and ~~2022.~~2023. The final number of PSUs will be determined using an adjustment factor of up to 2 times or down to 0.5 of the targeted PSU grant. If the minimum performance thresholds are not achieved, 0 shares will be issued. Each PSU will convert to 1 share of the Company's common stock upon vesting.

The grant of employee stock purchase rights and the issuance of shares under the employee stock purchase plan are made in the third quarter of each fiscal year and ~~677~~698 and ~~585~~677 shares were issued in the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The fair value of the employee stock purchase rights granted was ~~$23.26~~$28.55 and ~~$17.03~~$23.26 per share in 2021 and 2020, ~~and 2019,~~ respectively.

The Company recognizes stock compensation expense based on the fair value of awards granted to employees and directors under the Company’s Amended 2017 Plan ~~stock option~~ and employee stock purchase rights plans. This expense, adjusted for expected performance and forfeitures, is recognized in net earnings on a straight-line basis over the service periods as salaries and related costs on the condensed consolidated statements of earnings. ~~RSUs~~Restricted stock units (RSUs) and ~~PSUs~~performance share units (PSUs) awarded to certain employees meeting specific retirement eligibility criteria at the time of grant are expensed immediately as there is no substantive service period associated with those awards.

During 2020 ~~and 2019,~~ the Internal Revenue Service (IRS) and the U.S. Department of Treasury (Treasury) issued additional guidelines and clarifying regulations related to the implementation of the 2017 Tax Act. ~~The Company expects~~It is possible that additional guidance tocould be issued in future periods. As this guidance is issued, the Company will evaluate the information to determine whether any additional adjustments to its tax provisions are required.

The 2017 Tax Act included provisions for Global Intangible Low-Taxed Income (GILTI) under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries and for Base Erosion and Anti-Abuse Tax (BEAT) under which taxes are imposed on certain base eroding payments to affiliated foreign companies. The Company treats BEAT and GILTI as components of current income tax expense. For the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, there was 0 BEAT expense and GILTI expense was insignificant.

The Company’s consolidated effective income tax rate was ~~24.6%~~27.0% and ~~25.9%~~25.7%, respectively, for the three and nine months ended September 30, ~~2020, respectively,~~2021 as compared to ~~24.9%~~24.6% and ~~25.6%~~25.9% for the comparable periods in ~~2019. The effect~~2020. Both of ~~higher average~~the nine-month periods ended September 30, 2021 and 2020 benefited from significant share-based compensation tax deductions which reduced the effective tax rates ~~of our international subsidiaries, when compared to U.S. federal and state tax rates,~~in those periods. In 2021, these benefits were ~~partially offset by U.S. foreign tax credits and U.S. income tax deductions for Foreign-derived intangible income (FDII). The third quarter of~~primarily realized during the three-month period ended June 30, while in 2020, ~~effective tax rate benefited from increased tax deductions related to share-based compensation when compared to~~they principally occurred during the ~~same~~three-month period ~~in 2019, while the 2019 rate benefited from discrete adjustments primarily for additional guidance related to the calculation of FDII.~~ended September 30.

The Company is subject to taxation in various states and many foreign tax jurisdictions including the People’s Republic of China, ~~including~~ Hong Kong, Taiwan, Vietnam, India, Mexico, Canada, Netherlands and the United Kingdom. The Company believes that its tax positions, including intercompany transfer pricing policies, are reasonable and consistently applied. The Company is under, or may be subject to, audit or examination and assessments by the relevant authorities in respect to these and any other jurisdictions primarily for years 2009 and thereafter. Sometimes audits result in proposed assessments where the ultimate resolution could result in significant additional tax, penalties and interest ~~payments.~~payments being required. The Company establishes liabilities when, despite its belief that the tax return positions are appropriate and consistent with tax law, it concludes that it may not be successful in realizing the tax position. In evaluating a tax position, the Company determines whether it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position and in consultation with qualified tax advisors.

The total amount of the Company’s tax contingencies may increase in ~~2020 and beyond.~~2021. In addition, changes in state, federal, ~~state~~ and foreign tax laws, including transfer pricing and changes in interpretations of these laws may increase the Company’s existing tax contingencies. The timing of the resolution of income tax examinations can be highly uncertain, and the amounts ultimately paid including interest and penalties, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts recorded. It is reasonably possible that ~~within~~in the ~~next twelve months~~foreseeable future the Company may undergo further audits and examinations by various tax authorities and possibly may reach resolution related to income tax examinations in one or more jurisdictions. These assessments or settlements could result in changes to the Company’s contingencies related to positions on tax filings in future years. The estimate of any ultimate tax liability contains assumptions based on experiences, judgments about potential actions by taxing jurisdictions as well as judgments about the likely outcome of issues that have been raised by the taxing jurisdiction. Any interest and penalties expensed in relation to the underpayment of income taxes were insignificant for the three and nine months ended September 30, ~~2020~~2021 and ~~2019.~~

As discussed above, some elements of the recorded impacts of the 2017 Tax Act could be impacted by further legislative action as well as additional interpretations and guidance issued by the IRS or Treasury. As a result, the amount of income tax recorded in the future may differ, possibly materially. For further information and discussion of the potential impact of the 2017 Tax Act, refer to Note 7 to the consolidated financial statements in the Company's 2019 Annual Report on Form 10-K.2020.

Diluted earnings attributable to shareholders per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding. Dilutive potential shares represent outstanding stock options, including purchase options under the Company's employee stock purchase plan, and unvested restricted stock units. Basic earnings attributable to shareholders per share is calculated using the weighted average number of common shares outstanding without taking into consideration dilutive potential common shares outstanding.

The following table reconciles the numerator and the denominator of the basic and diluted per share computations for earnings attributable to shareholders:

	Nine months ended September 30,						Three months ended September 30,
	Net earnings attributable to shareholders		Weighted average shares		Earnings per share		Net earnings attributable to shareholders		Weighted average shares		Earnings per share
2021
Basic earnings attributable to shareholders							$	359,068		169,633	$	2.12
Effect of dilutive potential common shares								—		1,932		—
Diluted earnings attributable to shareholders							$	359,068		171,565	$	2.09
2020
Basic earnings attributable to shareholders	$	497,520		167,942	$	2.96	$	191,307		168,310	$	1.14
Effect of dilutive potential common shares		—		2,597		—		—		2,425		—
Diluted earnings attributable to shareholders	$	497,520		170,539	$	2.92	$	191,307		170,735	$	1.12
2019



							Nine months ended September 30,
							Net earnings attributable to shareholders		Weighted average shares		Earnings per share
2021
Basic earnings attributable to shareholders	$	453,069		171,084	$	2.65	$	962,660		169,398	$	5.68
Effect of dilutive potential common shares		—		3,379		—		—		2,151		—
Diluted earnings attributable to shareholders	$	453,069		174,463	$	2.60	$	962,660		171,549	$	5.61
2020
Basic earnings attributable to shareholders							$	497,520		167,942	$	2.96
Effect of dilutive potential common shares								—		2,597		—
Diluted earnings attributable to shareholders							$	497,520		170,539	$	2.92

Substantially all outstanding potential common shares as of September 30, ~~2020~~2021 and ~~2019~~2020 were dilutive.

The Company has a Discretionary Stock Repurchase Plan approved by the Board of Directors that authorizes management to reduce issued and outstanding common stock down to 160,000 shares. During the nine months ended September 30, ~~2020, 4,400~~2021, 2,038 shares were repurchased at an average price of $~~71.41~~110.45 per share, compared to ~~4,002~~4,400 shares at an average price of ~~$72.57~~$71.41 per share during the same period in ~~2019. In the first quarter of 2019, the Company also repurchased 88 shares at an average price of $74.03 under a Non-discretionary Stock Repurchase Plan that expired in 2019.~~2020.

Accumulated other comprehensive loss consisted entirely of foreign currency translation adjustments, net of related income tax effects, for all the periods presented.

On May 4, 2021, the Board of Directors declared a semi-annual dividend of $0.58 per share payable on June 15, 2021 to shareholders of record as of June 1, 2021. On May 5, 2020, the Board of Directors declared a semi-annual dividend of $0.52 per share payable on June 15, 2020 to shareholders of record as of June 1, 2020. ~~On May 7, 2019,~~

Subsequent to the end of the third quarter of 2021, on November 1, 2021, the Board of Directors declared a semi-annual dividend of ~~$0.50 per share payable on June 17, 2019 to shareholders of record as of June 3, 2019.~~

~~Subsequent to the end of the third quarter 2020, on November 2, 2020, the Board of Directors declared a semi-annual dividend of $0.52~~$0.58 per share payable on December 15, ~~2020~~2021 to shareholders of record as of December 1, ~~2020.~~2021.

The Company’s financial instruments, other than cash, consist primarily of cash equivalents, accounts receivable, accounts payable and accrued expenses. The carrying value of these financial instruments approximates their fair value. All highly liquid investments with a maturity of three months or less at date of purchase are considered to be cash equivalents.

	September 30, 2020				December 31, 2019				September 30, 2021				December 31, 2020
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Cash and Cash Equivalents:
Cash and overnight deposits	$	558,886	$	558,886	$	417,456	$	417,456	$	959,848	$	959,848	$	602,112	$	602,112
Corporate commercial paper		873,725		873,727		775,504		776,356		795,587		795,643		872,287		872,350
Time deposits		32,899		32,899		37,531		37,531		64,671		64,671		53,392		53,392
Total cash and cash equivalents	$	1,465,510	$	1,465,512	$	1,230,491	$	1,231,343	$	1,820,106	$	1,820,162	$	1,527,791	$	1,527,854

The fair value of corporate commercial paper and time deposits is based on the use of market interest rates for identical or similar assets (Level 2 fair value measurement).

The Company is involved in claims, lawsuits, government investigations and other legal matters that arise in the ordinary course of business and are subject to inherent uncertainties. Currently, in management's opinion and based upon advice from legal advisors, none of these matters are expected to have a significant effect on the Company's operations, cash flows or financial position. As of September 30, ~~2020,~~2021, the amounts accrued for these claims, lawsuits, government investigations and other legal matters are not significant to the Company's operations, cash flows or financial position. At this time, the Company is unable to estimate any additional loss or range of reasonably possible losses, if any, beyond the amounts recorded, that might result from the resolution of these matters.

The Company is organized functionally in geographic operating segments. Accordingly, management focuses its attention on revenues, directly related cost of transportation and other expenses for each of the Company’s three primary sources of revenue, salaries and other operating expenses, operating income, identifiable assets, capital expenditures and equity generated in each of these geographical areas when evaluating the effectiveness of geographic management. Transactions among the Company’s various offices are conducted using the same arms-length pricing methodologies the Company uses when its offices transact business with independent agents. Certain costs are allocated among the segments based on the relative value of the underlying services, which can include allocation based on actual costs incurred or estimated cost plus a profit ~~margin.~~margin.

Financial information regarding the Company’s operations by geographic area is as follows:

UNITED
STATES

OTHER
NORTH
AMERICA

LATIN
AMERICA

NORTH
ASIA

SOUTH
ASIA

EUROPE

MIDDLE
EAST,
AFRICA
AND
INDIA

ELIMI-
NATIONS

CONSOLI-
DATED

For the three months ended September 30, 2020:

Revenues¹

$
686,245

78,129

39,193

883,104

267,228

378,048

133,765

(915
)

2,464,797

Directly related cost of transportation and
other expenses²

$
379,588

44,911

23,361

720,807

200,334

261,325

100,619

(527
)

1,730,418

Salaries and other operating expenses³

$
197,749

25,325

12,359

81,876

39,926

96,658

28,925

(384
)

482,434

Operating income

$
108,908

7,893

3,473

80,421

26,968

20,065

4,221

(4
)

251,945

Identifiable assets at period end

$
2,336,071

163,943

76,173

689,525

231,771

642,124

228,423

(9,476
)

4,358,554

Capital expenditures

$
4,703

483

180

1,075

665

1,780

292

—

9,178

Equity

$
1,791,658

77,915

31,324

246,557

97,564

185,352

110,714

(36,611
)

2,504,473

For the three months ended September 30, 2019:

Revenues¹

$
692,229

88,088

38,341

624,351

196,569

320,769

115,397

(889
)

2,074,855

Directly related cost of transportation and
other expenses²

$
389,254

51,420

22,990

489,195

145,345

221,149

81,592

(446
)

1,400,499

Salaries and other operating expenses³

$
210,767

25,731

14,547

70,410

32,482

86,156

28,151

(438
)

467,806

Operating income

$
92,208

10,937

804

64,746

18,742

13,464

5,654

(5
)

206,550

Identifiable assets at period end

$
2,059,345

128,336

72,029

489,322

164,976

563,289

226,657

2,499

3,706,453

Capital expenditures

$
7,644

513

833

523

631

5,119

258

—

15,521

Equity

$
1,578,682

60,526

27,217

216,061

77,733

169,450

111,355

(31,737
)

2,209,287

	UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED			UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the nine months ended September 30, 2020:
Revenues¹	$	1,975,883		234,274		114,636		2,538,117		660,583		1,086,118		340,415		(2,733	)		6,947,293
Directly related cost of transportation and other expenses²	$	1,108,173		132,250		69,827		2,054,023		481,971		754,863		248,503		(1,423	)		4,848,187
Salaries and other operating expenses³	$	631,396		74,320		36,220		236,480		109,018		274,269		80,063		(1,286	)		1,440,480
For the three months ended September 30, 2021:
Revenues																					$	1,134,096		116,404		54,303		1,690,381		538,780		564,810		221,777		(1,290	)		4,319,261
Directly related cost of transportation and other expenses¹																					$	661,515		63,031		34,216		1,417,283		445,970		389,208		174,733		(466	)		3,185,490
Salaries and other operating expenses²																					$	238,943		33,077		14,759		141,109		54,003		126,475		36,598		(830	)		644,134
Operating income	$	236,314		27,704		8,589		247,614		69,594		56,986		11,849		(24	)		658,626		$	233,638		20,296		5,328		131,989		38,807		49,127		10,446		6			489,637
Identifiable assets at period end	$	2,336,071		163,943		76,173		689,525		231,771		642,124		228,423		(9,476	)		4,358,554		$	3,417,496		256,638		110,406		1,558,109		457,615		990,123		328,671		(42,675	)		7,076,383
Capital expenditures	$	28,276		1,692		498		1,785		1,035		3,418		715		—			37,419		$	6,001		248		175		435		351		2,254		406		—			9,870
Equity	$	1,791,658		77,915		31,324		246,557		97,564		185,352		110,714		(36,611	)		2,504,473		$	2,451,584		93,084		37,087		368,535		129,941		258,805		123,304		(41,748	)		3,420,592
For the nine months ended September 30, 2019:
Revenues¹	$	2,033,088		265,035		111,277		1,879,155		555,128		952,790		336,383		(2,371	)		6,130,485
Directly related cost of transportation and other expenses²	$	1,142,701		157,997		64,149		1,475,395		407,642		657,720		236,184		(1,468	)		4,140,320
Salaries and other operating expenses³	$	636,243		76,283		41,342		208,781		97,324		258,339		86,385		(884	)		1,403,813
For the three months ended September 30, 2020:
Revenues³																					$	686,243		77,414		39,193		795,155		259,069		359,107		133,447		(915	)		2,348,713
Directly related cost of transportation and other expenses^1,3																					$	379,586		44,196		23,361		632,858		192,175		242,384		100,301		(527	)		1,614,334
Salaries and other operating expenses²																					$	197,749		25,325		12,359		81,876		39,926		96,658		28,925		(384	)		482,434
Operating income	$	254,144		30,755		5,786		194,979		50,162		36,731		13,814		(19	)		586,352		$	108,908		7,893		3,473		80,421		26,968		20,065		4,221		(4	)		251,945
Identifiable assets at period end	$	2,059,345		128,336		72,029		489,322		164,976		563,289		226,657		2,499			3,706,453		$	2,336,071		163,943		76,173		689,525		231,771		642,124		228,423		(9,476	)		4,358,554
Capital expenditures	$	23,544		1,509		1,071		1,167		1,235		8,015		1,402		—			37,943		$	4,703		483		180		1,075		665		1,780		292		—			9,178
Equity	$	1,578,682		60,526		27,217		216,061		77,733		169,450		111,355		(31,737	)		2,209,287		$	1,791,658		77,915		31,324		246,557		97,564		185,352		110,714		(36,611	)		2,504,473


																				UNITED STATES			OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the nine months ended September 30, 2021:
Revenues³																				$		3,007,053		311,986		146,148		4,208,811		1,306,264		1,576,092		574,469		(3,649	)		11,127,174
Directly related cost of transportation and other expenses^1,3																				$		1,731,032		175,392		86,868		3,471,453		1,051,133		1,072,973		444,132		(1,576	)		8,031,407
Salaries and other operating expenses²																				$		718,762		90,114		41,871		354,841		146,214		359,338		100,899		(2,069	)		1,809,970
Operating income																				$		557,259		46,480		17,409		382,517		108,917		143,781		29,438		(4	)		1,285,797
Identifiable assets at period end																				$		3,417,496		256,638		110,406		1,558,109		457,615		990,123		328,671		(42,675	)		7,076,383
Capital expenditures																				$		11,931		434		300		1,192		1,462		7,908		1,573		—			24,800
Equity																				$		2,451,584		93,084		37,087		368,535		129,941		258,805		123,304		(41,748	)		3,420,592
For the nine months ended September 30, 2020:
Revenues³																				$		1,975,874		232,324		114,637		2,277,027		642,302		1,024,127		340,000		(2,733	)		6,603,558
Directly related cost of transportation and other expenses^1,3																				$		1,108,164		130,300		69,828		1,792,933		463,690		692,872		248,088		(1,423	)		4,504,452
Salaries and other operating expenses²																				$		631,396		74,320		36,220		236,480		109,018		274,269		80,063		(1,286	)		1,440,480
Operating income																				$		236,314		27,704		8,589		247,614		69,594		56,986		11,849		(24	)		658,626
Identifiable assets at period end																				$		2,336,071		163,943		76,173		689,525		231,771		642,124		228,423		(9,476	)		4,358,554
Capital expenditures																				$		28,276		1,692		498		1,785		1,035		3,418		715		—			37,419
Equity																				$		1,791,658		77,915		31,324		246,557		97,564		185,352		110,714		(36,611	)		2,504,473

The Company’s consolidated financial results in the three and nine months ended September 30, 2021 and 2020 ~~was~~were each significantly impacted by the effects of the global pandemic in divergent ways. In all quarters of 2021, the Company experienced strong volumes and ~~are expected~~high average sell and buy rates as a result of imbalances between demand and carrier capacity and continuing effects of disruptions in supply chains originating in measures to ~~be further impacted~~combat the pandemic in 2020.

This is in contrast with slower activity in North Asia in the ~~remainder of 2020. The impact is affecting the Company’s geographical segments unevenly.~~

~~In the second and third~~first quarter of 2020 ~~North Asia experienced~~as the pandemic resulted in temporary closures and limited operations in the Company’s China offices. Shipments were also rerouted or delayed by customers and service providers as they were taking their own precautionary measures. This was followed by significant increases in airfreight services revenues and ~~directly~~ related expenses, ~~primarily~~in the second and third quarters of 2020, as a result of demand for time-sensitive delivery of technology equipment and medical equipment and supplies from China, which combined with reductions in airfreight supply resulted in significantly higher average buy and sell rates. In

These impacts are affecting all of the ~~third quarter~~Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. For the three months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 32% and ~~2019,~~27%, respectively, of the Company’s total revenues and 21% and 26%, respectively, of the total operating income. For the nine months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 30% and ~~26%~~28%, respectively, of the Company’s total revenues and ~~26%~~23% and 30%, respectively, of the ~~Company’s~~ total operating ~~income in both periods.~~income.

~~This is in contrast with slower activity in North Asia~~Note 9. Correction of Immaterial Errors

Beginning in the first quarter of ~~2020 as~~2019, the ~~global pandemic resulted~~Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in ~~temporary closures and limited operations from~~ the Company’s ~~China offices~~historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and ~~shipments that were rerouted or delayed~~an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by ~~customers~~equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and ~~service providers taking their own precautionary measures. In~~earnings per share nor any other financial statement amount. Further, the ~~nine months ended September 30, 2020~~errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and ~~2019, the People's Republic of China, including Hong Kong, represented 31% and 26%, respectively,~~cash flows. These errors do not affect any of the ~~Company’s total revenues~~metrics used to calculate or evaluate management’s compensation and ~~30%~~had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and ~~27%, respectively,~~are presented on a comparable basis.

The below tables present the effect of the ~~Company’s total operating income.~~correction for the following periods:

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995; CERTAIN CAUTIONARY STATEMENTS

Certain portions of this report on Form 10-Q including the sections entitled "Overview,~~" "Novel Coronavirus (COVID-19),~~" "Expeditors' Culture and Strategy," "International Trade and Competition," "Seasonality," "Critical Accounting Estimates," "Results of Operations," "Income tax expense," "Currency and Other Risk Factors" and "Liquidity and Capital Resources" contain forward-looking statements. Words such as "will likely result," "expects", "are expected to," "would expect," "would not expect," "will continue," "is anticipated," "estimate," "project," "plan," "believe," "probable," "reasonably possible," "may," "could," "should," "intends," "foreseeable future" and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, our anticipated growth and trends in the Company's businesses, the anticipated impact and duration of ~~COVID-19,~~Novel Coronavirus (COVID-19) pandemic, current supply chain and transportation disruptions, and other characterizations of future events or circumstances are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These statements must be considered in connection with the discussion of the important factors that could cause actual results to differ materially from the forward-looking statements. ~~In addition to risk factors identified in Part II, Item 1A, Risk Factors of this report, attention~~Attention should be given to the risk factors identified and discussed in Part I, Item 1A in the Company's annual report on Form 10-K filed on February ~~21, 2020.~~19, 2021. Management believes that these forward-looking statements are reasonable as of this filing date and we do not assume any obligations to update these statements except as required by law.

Expeditors International of Washington, Inc. (herein referred to as "Expeditors," the "Company," "we," "us," "our") provides a full suite of global logistics services. Our services include air and ocean freight consolidation and forwarding, customs brokerage, warehousing and distribution, purchase order management, vendor consolidation, time-definite transportation services, temperature-controlled transit, cargo insurance, specialized cargo monitoring and tracking, and other ~~logistics~~supply chain solutions. We do not compete for overnight courier or small parcel business. As a non-asset based carrier, we do not own or operate transportation assets.

We derive our revenues by entering into agreements that are generally comprised of a single performance obligation, which is that freight is shipped for and received by our customer. Each performance obligation is comprised of one or more of the Company's services. We typically satisfy our performance obligations as services are rendered over time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. Our three principal services are the revenue categories presented in our financial statements: 1) airfreight services, 2) ocean freight and ocean services, and 3) customs brokerage and other services. The most significant drivers of changes in ~~gross~~ revenues and related transportation expenses are volume, sell rates and buy rates. Volume has a similar effect on the change in both ~~gross~~ revenues and related transportation expenses in each of our three primary sources of revenue.

We generate the major portion of our air and ocean freight revenues by purchasing transportation services on a wholesale basis from direct (asset-based) carriers and then reselling those services to our customers on a retail basis. The rate billed to our customers (the sell rate) is recognized as revenues and the rate we pay to the carrier (the buy rate) is recognized in operating expenses as the directly related cost of transportation and other expenses. By consolidating shipments from multiple customers and concentrating our buying power, we are able to negotiate favorable buy rates from the direct carriers, while at the same time offering lower sell rates than customers would otherwise be able to negotiate themselves.

In most cases, we act as an indirect carrier. When acting as an indirect carrier, we issue a House Airway Bill (HAWB), a House Ocean Bill of Lading (HOBL) or a House Seaway Bill to customers as the contract of carriage. In turn, when the freight is physically tendered to a direct carrier, we receive a contract of carriage known as a Master Airway Bill for airfreight shipments and a Master Ocean Bill of Lading for ocean shipments.

Customs brokerage and other services involve providing services at destination, such as helping customers clear shipments through customs by preparing and filing required documentation, calculating and providing for payment of duties and other taxes on behalf of customers as well as arranging for any required inspections by governmental agencies, and import services such as arranging for delivery. These are complicated functions requiring technical knowledge of customs rules and regulations in the multitude of countries in which we have offices. We also provide other value added services at destination, such as warehousing and distribution, time-definitive transportation services and consulting.

In these transactions, we evaluate whether it is appropriate to record the gross or net amount as revenue. Generally, revenue is recorded on a gross basis when we are primarily responsible for fulfilling the promise to provide the services, when we assume risk of loss, when we have discretion in setting the prices for the services to the customers, and we have the ability to direct the use of the services provided by the third party. When revenue is recorded on a net basis, the

amounts earned are determined using a fixed fee, a per unit of activity fee or a combination thereof. For revenues earned in other capacities, for instance, when we do not issue a HAWB, a HOBL or a House Seaway Bill or otherwise act solely as an agent for the shipper, only the commissions and fees earned for such services are included in revenues. In these transactions, we are not a principal and report only commissions and fees earned in revenue.

We manage our company along five geographic areas of responsibility: Americas; North Asia; South Asia; Europe; and Middle East, Africa and India (MAIR). Each area is divided into sub-regions that are composed of operating units with individual profit and loss responsibility. Our business involves shipments between operating units and typically touches more than one geographic area. The nature of the international logistics business necessitates a high degree of communication and cooperation among operating units. Because of this inter-relationship between operating units, it is very difficult to examine any one geographic area and draw meaningful conclusions as to its contribution to our overall success on a stand-alone basis.

Our operating units share revenue using the same arms-length pricing methodologies that we use when our offices transact business with independent agents. Certain costs are allocated among the segments based on the relative value of the underlying services, which can include allocation based on actual costs incurred or estimated cost plus a profit margin. Our strategy closely links compensation with operating unit profitability, which includes shared revenues and allocated costs. Therefore, individual success is closely linked to cooperation with other operating units within our network.

The mix of services varies by segment based primarily on the import or export orientation of local operations in each of our regions.

~~Novel Coronavirus (COVID-19)~~ In accordance with our revenue recognition policy (see Note 1.B to the condensed consolidated financial statements in this report) freight revenue and related expenses are recorded by the office that performs the transportation service. Shipment profits are split between origin and destination offices by recording a commission fee or profit share of revenue at the destination.

The ~~COVID-19~~disruptions on supply chains and transportation caused by the pandemic ~~has~~have significantly affected our business operations and operating results in ~~the nine months ended September 30,~~ 2020 and we2021. Continued imbalances between demand and available capacity for all transportation modes have resulted in historically high average buy and sell rates and creates significant challenges for our network to meet our customers’ needs. We expect these disruptive conditions to continue ~~into 2021. At this time,~~at least through the ~~main elements~~first half of ~~its~~2022. As discussed in more detail under “Results of Operations”, there are significant constraints on current capacity for both air freight and ocean freight. This is due to a number of factors, including significantly reduced flight schedules which limited available belly space for cargo, congestion at ports, as well as labor and equipment shortages. Air freighters and charters, container ships and gateway infrastructure are operating at near maximum capacity. While we believe these constraints are not long-term in nature, they may impact on our ~~business are summarized below:~~

~~These conditions are expected~~ to ~~continue into 2021.~~move increased air and ocean volumes in these capacity-constrained regions. We are unable to predict how these uncertainties ~~and any future disruptions, such as the urgent distribution of COVID-19 vaccines,~~ will affect our future operations or financial ~~results. A prolonged recession~~results, but these conditions could result in lower operating income. In an effort to protect the health and safety of our employees, we continue to operate under our global business continuity plan that we implemented in the ~~global economy and slowdown~~first quarter of 2020. See Part I, Item 1A: “Risk Factors” in ~~trade would negatively affect~~ our ~~operations in~~annual report on Form 10-K for the ~~future.~~year ended December 31, 2020 as updated herein under Part II Item 1A for additional details.

From the inception of our company, management has believed that the elements required for a successful global service organization can only be assured through recruiting, training, and ultimately retaining superior personnel. We believe that our greatest challenge is now and always has been perpetuating a consistent global corporate culture, which demands:

We reinforce these values with a compensation system that rewards employees for profitably managing the things they can control. This compensation system has been in place since we became a publicly traded company. There is no limit to how much a key manager can be compensated for success. We believe in a “real world” environment where the employees of our operating units are held accountable for the profit implications of their decisions. If these decisions result in operating losses, management generally must make up these losses with future operating profits, in the aggregate, before any cash incentive compensation can be earned. Executive management, in limited circumstances, makes exceptions at the branch operating unit level. At the same time, our policies, processes and relevant training focus on such things as cargo management, risk mitigation, compliance, accounts receivable collection, cash flow and credit soundness in an attempt to help managers avoid the kinds of errors that might end a career.

We believe that our unique culture, at the center of which are our employees, is a critical component to our continued success. We strongly believe that it is nearly impossible to predict events that, individually or in the aggregate, could have a positive or a negative impact on our future operations. As a result, management's focus is on building and maintaining a global corporate culture and an environment where well-trained employees and managers are prepared to identify and react to changes as they develop and thereby help us adapt and thrive as major trends emerge. Global consistency and compliance is fundamental to preserving our culture and network of people, processes, technology and locations.

Our business growth strategy emphasizes a focus on the right markets and, within each market, on the right customers that lead to profitable business ~~growth.~~growth through the aggressive marketing of our service offerings. Innovative solutions, integrated platforms and data quality are vital to achieving a competitive advantage. Expeditors' teams are aligned on the specific markets; on the targeted accounts within those markets; and on ways that we can continue to differentiate ourselves from our competitors.

Our ability to provide services to customers is highly dependent on good working relationships with a variety of entities including airlines, ocean carriers, ground transportation providers and governmental agencies. The significance of maintaining acceptable working relationships with these entities has gained increased importance as a result of ~~the effect of the pandemic,~~ ongoing concern over supply-chain disruptions, terrorism, security, changes in governmental regulation and oversight of international trade. A good reputation helps to develop practical working understandings that will assist in meeting security requirements while minimizing potential international trade obstacles, especially as governments ~~rapidly~~ promulgate new regulations in reaction to the pandemic and increase oversight and enforcement of new and existing laws. We consider our current working relationships with these entities to be satisfactory.

Our business is also highly dependent on the financial stability and operational capabilities of the carriers we utilize. Carriers are highly leveraged with debt and many are incurring, or have recently incurred, operating losses. ~~As a result, carriers are facing liquidity challenges exacerbated by the pandemic and are seeking relief under various government support programs.~~ This environment requires that we be selective in determining which carriers to utilize. Further changes in the financial stability, operating capabilities and capacity of asset-based carriers, capacity allotments available from carriers, governmental regulations, and/or trade accords could adversely affect our business in unpredictable ways.

As a knowledge-based global provider of logistics services, we have often concluded over the course of our history that it is better to grow organically rather than by acquisition. However, when we have made acquisitions, it has generally been to obtain technology, geographic coverage or specialized industry expertise that could be leveraged to benefit our entire network. ~~In May 2020, we acquired a less-than-truckload digital online shipping platform which aligns with our focus on enhancing our digital solutions.~~

We operate in over 60 countries in the competitive global logistics industry and our activities are closely tied to the global economy. The global economy entered into a recession as a result of the pandemic and related precautionary measures including government mandated lockdowns, shutdown of manufacturing and operations for non-essential businesses and travel restrictions. International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, laws and policies relating to tariffs, trade restrictions, foreign investments and taxation. Periodically, governments consider a variety of changes to tariffs and trade restrictions and accords. Currently, the United States and China have significantly increased tariffs on certain imports and are engaged in trade negotiations and changes to export regulations and tariffs. ~~The~~In 2020, the United Kingdom and the European Union ~~are negotiating~~negotiated the terms of the United Kingdom's exit from the European Union ~~and trade relations when the transition period ends~~(Brexit), which were effective on ~~December 31, 2020.~~January 1, 2021. We cannot predict the outcome of ~~these proposals~~changes in tariffs, or ~~negotiations, or~~interpretations, and trade restrictions and accords and the effects they will have on our business. As governments implement higher tariffs on imports, manufacturers may accelerate, to the extent possible, shipments to avoid higher tariffs and, over time, may shift manufacturing to other countries. The pandemic’s significant impact on supply chains along with other geo-political considerations may also drive manufacturers to relocate their operations or make changes to how they manage their supply chains and inventories in order to reduce their exposure to such disruptions in the future. Doing business in foreign locations also subjects us to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being influenced by governmental policies and inter-governmental disputes concerning international trade, our business may also be negatively affected by political developments and changes in government personnel or policies in the United States and other countries, as well as economic turbulence, political unrest and security concerns in the nations and on the trade shipping lanes in which we conduct business and the future impact that these events may have on international trade, oil prices and security costs.

The global logistics services industry is intensely competitive and is expected to remain so for the foreseeable future. Our pricing and terms continue to be pressured by uncertainty in global trade and economic conditions, concerns over availability of airfreight, ocean freight and trucking capacity, ~~availability,~~ volatile ~~airfreight~~carrier pricing, disruptions in port services, political unrest and fluctuating currency exchange rates. We expect these operating and competitive conditions to continue. ~~Air~~

Most air carriers are experiencing significant cash flow challenges as a result of travel restrictions resulting in cancellation of ~~flights.~~flights and have incurred record operating losses in 2020 and 2021. Uncertainty over recovery of demand for passenger air travel, in particular business travel, compared to pre-pandemic levels may impact air carriers’ operations and financial stability long term. ~~Many~~Prior to 2020, many ocean carriers ~~have~~ incurred substantial operating losses, ~~in recent years,~~ and are highly leveraged with debt. These financial challenges have resulted in multiple carrier acquisitions and carrier alliance formations. Additionally, carriers continue to take delivery of new and larger ships, which may increase capacity. Carriers also face new regulatory requirements that became effective in 2020 requiring reductions in the sulfur in marine fuel, which are increasing their operating and capital costs. When the market experiences seasonal peaks or any sort of disruption, the carriers often increase their pricing suddenly. This carrier behavior creates pricing volatility that could impact Expeditors' ability to maintain historical unitary profitability.

There is uncertainty as to how new regulatory requirements and ~~volatility~~increase in oil prices will continue to impact future buy rates. Because fuel is an integral part of carriers' costs and impacts both our buy rates and sell rates, we would expect our revenues and costs to be impacted as carriers adjust rates for the effect of changing fuel prices. To the extent that future fuel prices increase and we are unable to pass through the increases to our customers, this could adversely affect our operating income.

The global economic and trade environments remain uncertain, including the ongoing impacts of the pandemic. We cannot predict the impact of future changes in global trade on our operating results, freight volumes, pricing and other operating costs, including inflationary pressures, changes in consumer demand, carrier stability and capacity, customers’ abilities to pay or on changes in competitors' behavior. Additionally, we cannot predict the direct or indirect impact that further changes in consumer purchasing behavior, such as online shopping, could have on our business. In response to governments implementing higher tariffs on imports as well as responses to ~~pandemics’~~the pandemic’s disruptions, some customers have begun shifting manufacturing to other countries, which could negatively impact us.

Historically, our operating results have been subject to seasonal demand trends with the first quarter being the weakest and the third and fourth quarters being the strongest; however, there is no assurance that this seasonal trend will occur in the future or to what degree it will continue to be impacted in ~~2020~~2021 by the ~~global~~ pandemic. This historical pattern has been the result of, or influenced by, numerous factors, including weather patterns, national holidays, consumer demand, new product launches, economic conditions, pandemics, governmental policies and inter-governmental disputes and a myriad of other similar and subtle forces. In addition, this historical quarterly trend has been influenced by the growth and diversification of our international network and service offerings.

A significant portion of our revenues is derived from customers in the retail and technology industries whose shipping patterns are tied closely to consumer demand, and from customers in industries whose shipping patterns are dependent upon just-in-time production schedules. Therefore, the timing of our revenues are, to a large degree, impacted by factors out of our control, such as a sudden change in consumer demand for retail goods, changes in trade tariffs, product launches, disruptions in supply-chains and/or manufacturing production delays. Additionally, many customers ship a significant portion of their goods at or near the end of a quarter and, therefore, we may not learn of a shortfall in revenues until late in a quarter.

To the extent that a shortfall in revenues or earnings was not expected by securities analysts or investors, any such shortfall from levels predicted by securities analysts or investors could have an immediate and adverse effect on the trading price of our stock. We cannot accurately forecast many of these factors, nor can we estimate accurately the relative influence of any particular factor and, as a result, there can be no assurance that historical patterns will continue in future periods.

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and judgments. We base our estimates on historical experience and on assumptions that we believe are reasonable. Our critical accounting estimates are discussed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our annual report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed on February ~~21, 2020.~~19, 2021. There have been no material changes to the critical accounting estimates previously disclosed in that report.

The following table shows the revenues, the directly related cost of transportation and other expenses for our principal services and our overhead expenses for the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, including the respective percentage changes comparing ~~2020~~2021 and ~~2019.~~2020.

The table and the accompanying discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes thereto in this quarterly report.

	Three months ended September 30,					Nine months ended September 30,					Three months ended September 30,					Nine months ended September 30,
(in thousands)	2020		2019		Percentage change	2020		2019		Percentage change	2021		2020		Percentage change	2021		2020		Percentage change
Airfreight services:
Revenues	$	1,093,550	$	715,450	53%	$	3,237,179	$	2,171,928	49%
Expenses		833,689		522,868	59		2,450,931		1,574,717	56
Revenues¹											$	1,628,115	$	983,199	66%	$	4,477,599	$	2,908,451	54%
Expenses¹												1,244,381		723,340	72		3,335,253		2,122,205	57
Ocean freight services and ocean services:
Revenues		612,858		585,374	5		1,597,997		1,697,824	(6)
Expenses		455,072		424,215	7		1,185,154		1,234,845	(4)
Revenues¹												1,598,597		609,816	162		3,651,059		1,590,541	130
Expenses¹												1,254,334		452,028	177		2,859,020		1,177,696	143
Customs brokerage and other services:
Revenues		758,389		774,031	(2)		2,112,117		2,260,733	(7)
Expenses		441,657		453,416	(3)		1,212,102		1,330,758	(9)
Revenues¹												1,092,549		755,698	45		2,998,516		2,104,566	42
Expenses¹												686,775		438,966	56		1,837,134		1,204,551	53
Overhead expenses:
Salaries and related costs		373,613		356,331	5		1,110,760		1,069,592	4		519,611		373,613	39		1,452,902		1,110,760	31
Other		108,821		111,475	(2)		329,720		334,221	(1)		124,523		108,821	14		357,068		329,720	8
Total overhead expenses		482,434		467,806	3		1,440,480		1,403,813	3		644,134		482,434	34		1,809,970		1,440,480	26
Operating income		251,945		206,550	22		658,626		586,352	12		489,637		251,945	94		1,285,797		658,626	95
Other income, net		2,484		7,396	(66)		14,031		23,945	(41)		3,195		2,484	29		12,978		14,031	(8)
Earnings before income taxes		254,429		213,946	19		672,657		610,297	10		492,832		254,429	94		1,298,775		672,657	93
Income tax expense		62,710		53,319	18		173,968		156,029	11		132,922		62,710	112		333,941		173,968	92
Net earnings		191,719		160,627	19		498,689		454,268	10		359,910		191,719	88		964,834		498,689	93
Less net earnings attributable to the noncontrolling interest		412		406	1		1,169		1,199	(3)		842		412	104		2,174		1,169	86
Net earnings attributable to shareholders	$	191,307	$	160,221	19%	$	497,520	$	453,069	10%	$	359,068	$	191,307	88%	$	962,660	$	497,520	93%

In ~~the second quarter~~2020 and continuing inthrough the ~~third quarter~~first three quarters of ~~2020,~~2021, airfreight services experienced unprecedented events in response to the global pandemic. As a result of travel restrictions and lower passenger demand, airlines significantly reduced flight schedules which limited available belly space for cargo at a time where global demand ~~for time-sensitive delivery of essential PPE, medical supplies and technology equipment~~ remained high. ~~This has~~Demand grew in the fourth quarter of 2020 and continued to remain high in 2021, amplified by a strong economy and customers converting to air shipments due to disruptions in ocean transportation, placing further constraints on available capacity. These conditions have caused extreme imbalances between carrier capacity and demand, principally on exports out of North Asia and South Asia. In order to execute and meet the transportation needs of our customers we ~~heavily utilized~~further increased utilization of charter flights and purchased capacity in advance and on the spot market, which resulted in ~~historically~~sustained high average buy and sell rates. Freighters, charters and gateway infrastructure are operating at near maximum capacity which is continuing the pressure on buy rates and limiting the ability to move additional volume.

Airfreight services revenues and expenses increased ~~53%~~66% and ~~49%~~72%, respectively, during the three ~~and nine~~ months ended September 30, ~~2020, respectively,~~2021, as compared with the same ~~periods for 2019, primarily~~period in 2020, due to ~~70%~~a 28% increase in tonnage and ~~69%~~32% and 36% increases in average sell and buy rates, ~~offset by 5% and 8% declines in tonnage. Sell rates~~respectively. Tonnage increased in all regions with the largest ~~impacts~~increase coming from exports out of North America and North Asia. Average sell and buy rates increased in most regions.

Airfreight services revenues and expenses increased 54% and 57%, respectively, during the nine months ended September 30, 2021, as compared with the same period in 2020, due to a 32% increase in tonnage and 19% and 21% increase in average sell and buy rates, respectively. Tonnage increased in all regions with the largest increase coming from exports out of North Asia and ~~South Asia.Tonnage declined~~North America. The increase in ~~all regions except North Asia. North Asia airfreight services revenue represented 23% and 14%~~ ~~of the total Company consolidated revenues~~tonnage for the nine months ended September 30, 2021 is also affected by low levels of activity in the first half of 2020 in the United States and ~~2019, respectively.~~

~~Airfreight services expenses increased 59% and 56% during the three and nine months ended September 30,~~first quarter of 2020 ~~respectively, as compared with the same periods for 2019, principally~~in China as a result of ~~a 73%~~pandemic related closures. Average sell and ~~71% increase in average~~ buy ~~rates. Buy~~ rates increased in all regions with the largest impacts in North Asia and South Asia. While still historically high, sequentially buy rates have come down in the third quarter of 2020 as compared to the second quarter of 2020.

The decrease in airfreight tonnage was primarily due to the global pandemic. As a result of the pandemic, governments around the world have implemented travel restrictions and suspended non-essential services. This has caused supply chain disruptions for our domestic and international customers, which correspondingly decreased our airfreight volumes. South Asia, North America and Europe had decreases in tonnage of 28%, 6% and 16% for the three months ended September 30, 2020 and 29%, 8% and 11% for the nine months ended September 30, 2020. North Asia had increases in tonnage of 14% and 7%, in the three months and nine months ended September 30, 2020, respectively.regions.

These conditions ~~created~~create a high degree of volatility in volumes, average buy rates and sell ~~rates.~~rates and are expected to continue at least through the first half of 2022, as international passenger flights are not expected to return to pre-pandemic levels, additional capacity from freighters is limited and disruptions in the ocean market continue to impact

demand for airfreight. The continued historically average high buy and sell rates have significantly contributed to the growth in our expenses and revenues and financial results in the first three quarters of 2021. These unprecedented operating conditions are not expected to be sustained long-term. We are unable to predict how these uncertainties and any future disruptions ~~such as the urgent distribution of COVID-19 vaccines,~~ will affect our future operations or financial results.

Ocean freight consolidation, direct ocean forwarding and order management are the three basic services that constitute and are collectively referred to as ocean freight and ocean services. Ocean freight and ocean services revenues increased 162% and 130%, respectively, while expenses increased 5% 177% and 7%143%, ~~respectively,~~ for the three ~~months ended September 30, 2020 as compared to the same period in~~ ~~2019~~. ~~Ocean freight~~ and ~~ocean services revenues and expenses~~ ~~decreased 6% and 4%, respectively,~~ ~~for the~~ nine months ended September 30, ~~2020~~ 2021as compared with the same ~~period~~periods in ~~2019.~~ 2020. The largest component of our ocean freight and ocean services revenue ~~was~~is derived from ocean freight consolidation, which represented 6480% and ~~65%~~64% of ocean freight and ocean services revenue for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Ocean freight consolidation revenues and expenses increased 7%239% and 8%235%, respectively, for the three months ended September 30, ~~2020~~2021 as compared with the same ~~period~~periods in ~~2019,~~2020, primarily due to a ~~13%~~194% and 190% increase in average sell ~~rates~~ and buy rates, ~~offset by~~respectively, and a ~~5% decrease~~15% increase in containers shipped. ~~Ocean freight consolidation revenues~~Revenues and expenses ~~decreased 8~~%increased 188% and 6%187%, respectively, for the nine months ended September 30, ~~2020~~2021 as compared with the same period in ~~2019,~~2020, primarily due to a ~~9% decline in containers shipped, partially offset by a 4%~~130% and 5%129% increase in average sell ~~rates~~ and buy rates, ~~respectively. Additionally, for~~respectively, and a 26% increase in containers shipped. Demand started increasing in the second half of 2020 and continued to increase through the nine months ended September 30, 2021 due to backlogs in supply chains, low customer inventory levels, and high consumer demand creating a severe imbalance between demand and capacity in particular on exports from North Asia and South Asia. The deficiency in available capacity continues to be affected by unprecedented congestion at ports due to labor and equipment shortages, which disrupts sailing schedules, and resulted in record high average buy rates. Average buy rates and sell rates spiked in the third quarter 2021 from already historically high levels due to increased demand in preparation of the holiday season exacerbating the imbalance between demand and available capacity in particular on export out of North Asia and South Asia. Average sell rates and volumes increased in the nine months ended September 30, 2021, compared to low levels of activity in China in the first quarter of 2020 and in North America in the ~~changes~~first half of 2020 due to pandemic related closures. These extremely challenging conditions are impacting the ability to secure necessary capacity from ocean carriers, as well as the time and resources required to process shipments and meet the sharply growing demands of customers.

Containers shipped were up in all regions with the largest increase from exports out of North Asia and South Asia. North Asia Ocean freight ~~consolidation~~and ocean services revenues increased 168% and 154%, respectively, while directly related expenses ~~include a r~~increased 181% and 169%, for the three and nine months ended September 30, 2021~~evised presentation of destination~~primarily due to higher average sell rates and buy rates and increases in containers shipped. South Asia ocean freight and ocean services ~~that started in the second quarter of 2019, which decreased~~ revenues increased 268% and 207%, respectively, while directly related ~~operating~~ expenses ~~in ocean freight consolidation but did not change consolidated operating income.~~increased 310% and 237%, respectively, for the three and nine months ended September 30, 2021for the same reasons as North Asia.

Direct ocean freight forwarding revenues ~~and expenses~~ increased 322% ~~and 9%~~, ~~respectively,~~while expenses increased 27%, for both the three and nine months ended September 30, ~~2020,~~2021 principally due to higher volumes and ~~changes in customer mix primarily in North Asia~~increased ancillary services provided at higher rates. Order management revenues increased 24% and ~~Europe, as well as due to higher costs. Direct ocean freight forwarding revenues and expenses~~ ~~increased~~ ~~4% and 11%~~33%, respectively, while expenses increased 28% and 36%, for the three and nine months ended September 30, ~~2020, principally~~ 2021due to higher volumes and changes in customer mix primarily in North America and Europe, partially offset by a decrease in volumes in North Asia. Order management revenues and expenses for the three months ended September 30, 2020 were consistent with the same period in 2019. Order management revenues and expenses decreased 9% and 8%, respectively, for the nine months ended September 30, 2020, primarily due to lower volumes mostly from the retail industry.

North Asia ocean freight and ocean services revenues and directly related expenses increased 11% and 13%, respectively, for the three months ended September 30, 2020, primarily due to an increase in sell rates and buy rates. North Asia ocean freight and ocean services revenues and directly related expenses decreased 11% and 10%, respectively, for the nine months ended September 30, 2020, as compared with the same period in 2019, primarily due to a decrease in container volume in the first half of 2020. The largest decline in container volumes during the nine months ended September 30, 2020 were in North Asia, which started in 2019 and continued through the first half of 2020.higher costs.

Most ocean carriers ~~continued to manage their capacity according to~~experienced significant increases in market demand. starting in the second half of 2020 and we expect this demand to continue at least through the first half of 2022. Until port congestion, labor and equipment shortages subside, we believe there will be continued pressure on buy rates. We also expect that pricing volatility will continue as ~~customers solicit bids, react to governmental trade policies and adjust to the slowdown of the global economy from the pandemic, while~~ carriers ~~continue to~~ adapt to changes in capacity and market demand and ~~merge or create alliances with other carriers. Carriers also face new regulatory requirements that became effective in 2020~~customers react to ~~reduce the use of sulfur in marine fuel, which are increasing their operating and capital costs, which could result in higher costs for us.~~governmental trade policies. These conditions could result in lower operating income. The historically high average buy and sell rates have significantly contributed to the growth in our expenses and revenues in the three and nine months ended September 30, 2021. These unprecedented operating conditions are not expected to be sustained long-term.

Customs brokerage and other services revenues ~~decreased 2%~~increased 45% and 7%42%, respectively, and expenses ~~decreased 3%~~increased 56% and 9%53% for the three and nine months ended September 30, ~~2020,~~2021, respectively, as compared with the same periods in ~~2019,~~2020, primarily due to ~~decreases~~an increase in shipments from existing ~~customers.~~and new customers, an increase in demand for brokerage services, in part due to Brexit, and higher charges on import services due to port congestion. Road freight, warehousing and distribution services also grew as a result of higher volumes and higher trucking, storage and labor costs. Slowdowns due to the ~~pandemic related~~pandemic-related closures affected volumes, particularly in aerospace, automotive, oil and energy and certain portions of the retail ~~sectors.~~sectors in 2020 creating a backlog in supply chains that resulted in higher demand for services in the nine months ended September 30, 2021. Customers continue to value our brokerage services due to changing tariffs and increasing complexity in the declaration process. Customers seek knowledgeable customs brokers with sophisticated computerized capabilities critical to an overall logistics management program that are necessary to rapidly respond to changes in the regulatory and security environment.

North America revenues ~~decreased 4%~~increased 50% and 9%46% and directly related expenses ~~decreased 6%~~increased 75% and ~~13%~~65% for the three and nine months ended September 30, ~~2020,~~2021, respectively, as compared with the same periods ~~for 2019,~~in 2020, primarily as a result of ~~lower~~higher volumes in customs brokerage. andhigher charges on import services due to port congestion. Europe revenues increased 47% and directly related expenses increased 43% and 45% for the three and nine months ended September 30, 2021, respectively, as compared with the same periods in 2020, primarily due to an increase in demand for brokerage services, in part due to Brexit.

Salaries and related costs increased by 5%39% and 4%31% for the three and nine months ended September 30, ~~2020,~~2021, respectively, as compared with the same periods in ~~2019,~~2020, principally due to increases in commissions and bonuses earned from higher revenues and operating ~~income.~~income and a 6% increase in headcount to support growing activity.

Historically, the relatively consistent relationship between salaries and operating income has been the result of a compensation philosophy that has been maintained since the inception of our company: offer a modest base salary and the opportunity to share in a fixed and determinable percentage of the operating profit of the business unit controlled by each key employee. Using this compensation model, changes in individual incentive compensation occur in proportion to changes in our operating income, creating an alignment between branch and corporate performance and shareholder interests.

Our management compensation programs have always been incentive-based and performance driven. Bonuses to field and executive management for the nine months ended September 30, ~~2020~~2021 were up ~~15%~~70% when compared to the same period in ~~2019. Bonuses under the executive incentive compensation plan were up 5% when compared to the same period in 2019,~~2020, primarily due to ana 95% increase in operating income offset by a reduction made to senior executive management bonus allocations, as well as unused bonus allocations available for future investments in the development of key personnel.

Because our management incentive compensation programs are also cumulative, generally no management bonuses can be paid unless the relevant business unit is, from inception, cumulatively profitable. Any operating losses must be offset in their entirety by operating profits before management is eligible for a bonus. Executive management, in limited circumstances, makes exceptions at the branch operating unit level. Since the most significant portion of management compensation comes from the incentive bonus programs, we believe that this cumulative feature is a disincentive to excessive risk taking by our managers. The outcome of any higher risk transactions, such as overriding established credit limits, would be known in a relatively short time frame. Management believes that when the potential and certain impact on the bonus is fully considered in light of the short operating cycle of our services, the potential for short-term gains that could be generated by engaging in risky business practices is sufficiently mitigated to discourage excessive and inappropriate risk taking. Management believes that both the stability and the long-term growth in revenues, operating income and net earnings are a result of the incentives inherent in our compensation programs.

Other overhead expenses ~~decreased 2%~~increased 14% and 1%8%, respectively, for the three and nine months ended September 30, ~~2020, respectively,~~2021, as compared with the same periods in ~~2019.~~ 2020. The ~~decrease~~increases in expenses ~~was due to~~are the result of increases from renting additional space, higher local tax expenses, certain operational expenses and technology related costs. For the nine months ended September 30, 2021 increases were partially offset by a ~~significant~~ decrease in travel and entertainment ~~expense offset by increases~~expenses due to travel restrictions. As travel restrictions ease in ~~bad debt expense, local tax expense~~the future, we expect travel and ~~depreciation expense.~~entertainment expenses to increase. We will continue to make important investments in people, processes and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.

Our consolidated effective income tax rate was ~~24.6%~~27.0% and ~~25.9%~~25.7%, respectively, for the three and nine months ended September 30, ~~2020, respectively,~~2021 as compared to ~~24.9%~~24.6% and ~~25.6%~~25.9% for the same periods in ~~2019. The effect~~2020. Both of ~~higher average~~the nine-month periods ended September 30, 2021 and 2020 benefited from significant share-based compensation tax deductions which reduced the effective tax rates ~~of our international subsidiaries, when compared to U.S. federal and state tax rates,~~in those periods. In 2021, these benefits were ~~partially offset by U.S. foreign tax credits and U.S. income tax deductions for Foreign-derived intangible income (FDII). The third quarter of~~primarily realized during the three-month period ended June 30, while in 2020, ~~effective tax rate benefited from increased tax deductions related to share-based compensation when compared to~~they principally occurred during the ~~same~~three-month period ~~in 2019, while the third quarter of 2019 rate benefited from discrete adjustments primarily for additional guidance related to the calculation of FDII.~~

ended September 30. Some elements of the recorded impacts of the 2017 Tax Act could be impacted by further legislative action as well as additional interpretations and guidance issued by the IRS or Treasury. See Note 3 to the condensed consolidated financial statements for additional information.

The nature of our worldwide operations necessitates dealing with a multitude of currencies other than the U.S. dollar. This results in our being exposed to the inherent risks of volatile international currency markets and governmental interference. Some of the countries where we maintain offices and/or agency relationships have strict currency control regulations, which influence our ability to hedge foreign currency exposure. We try to compensate for these exposures by accelerating international currency settlements among our offices and agents. We may enter into foreign currency hedging transactions where there are regulatory or commercial limitations on our ability to move money freely around the world or the short-term financial outlook in any country is such that hedging is the most time-sensitive way to mitigate short-term exchange losses. Any such hedging activity during the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 was insignificant. We had no foreign currency derivatives outstanding at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. For the three months ended September 30, 2021, net foreign currency gains were less than $1 million. For the nine months ended September 30, 2021 net foreign currency losses were approximately $1 million. During

both the three and nine months ended September 30, 2020, net foreign currency losses were approximately $9 million. ~~During the three and nine months ended September 30, 2019, net foreign currency losses were approximately $1 million and $5 million, respectively.~~

International air and ocean freight forwarding and customs brokerage are intensely competitive and are expected to remain so for the foreseeable future. There are a large number of entities competing in the international logistics industry, including new technology-based competitors entering the industry, many of which have significantly more resources than us; however, our primary competition is confined to a relatively small number of companies within this group. Expeditors must compete against both the niche players and larger entities. The industry continues to experience consolidations into larger firms striving for stronger and more complete multinational and multi-service networks. This includes certain ocean carriers offering more integrated services directly to shippers. However, regional and local brokers and forwarders remain a competitive force.

The primary competitive factors in the international logistics industry continue to be price and quality of service, including reliability, responsiveness, expertise, convenience, and scope of operations. We emphasize quality customer service and believe that our prices are competitive with those of others in the industry. Customers regularly solicit bids from competitors in order to improve service, pricing and contractual terms such as seeking longer payment terms, higher or unlimited liability limits and performance penalties. Increased competition and competitors' acceptance of expanded contractual terms coupled with customers’ dissatisfaction with elevated rates, scarce capacity and extended transit times could result in loss of business, reduced revenues ~~reduced~~and operating income, higher operating costs, higher claims or loss of market share, any of which would damage our results of operations and financial condition.

Larger customers utilize more sophisticated and efficient procedures for the management of their logistics supply chains by embracing strategies such as just-in-time inventory management. We believe that this trend has resulted in customers using fewer service providers with greater technological capacity and more consistent global coverage. Accordingly, sophisticated computerized customer service capabilities and a stable worldwide network have become significant factors in attracting and retaining customers. Developing and maintaining these systems and a worldwide network has added a considerable indirect cost to the services provided to customers. Smaller and middle-tier competitors, in general, do not have the resources available to develop customized systems and a worldwide network.

Our principal source of liquidity is cash and cash equivalents and cash generated from operating activities. Net cash provided by operating activities for the three and nine months ended September 30, ~~2020~~2021 was $177 million and $563 million, respectively, as compared with $162 million and $513 ~~million as compared with $161 million and $607~~ million for the same periods in ~~2019.~~2020. The $1increases of $15 million ~~increase~~and $50 million for the three months ~~ended September 30, 2020 was primarily due to higher airfreight~~ and ~~ocean revenues offset by changes in working capital. The decrease of $94 million for the~~ nine months ended September 30, ~~2020 was~~2021, respectively, were primarily due to ~~changes in working capital, primarily as a result of~~ higher net earnings, partially offset by increases in accounts ~~receivable~~receivables from ~~higher airfreight~~growth in revenues ~~during the second~~ and ~~third quarter of 2020 when compared to the same periods in 2019.~~ slower collections from customers. At September 30, ~~2020,~~2021, working capital was ~~$1,913~~$2,836 million, including cash and cash equivalents of ~~$1,466~~$1,820 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at September 30, ~~2020.~~2021. Management believes that our current cash position and operating cash flows will be sufficient to meet our capital and liquidity requirements for at least the next 12 months and thereafter for the foreseeable future.

As a customs broker, we make significant cash advances for a select group of our credit-worthy customers. These cash advances are for customer obligations such as the payment of duties and taxes to customs authorities in various countries throughout the world. Increases in duty rates could result in increases in the amounts we advance on behalf of our customers. Cash advances are a “pass through” and are not recorded as a component of revenue and expense. The billings of such advances to customers are accounted for as a direct increase in accounts receivable from the customer and a corresponding increase in accounts payable to governmental customs authorities. As a result of these “pass through” billings, the conventional Days Sales Outstanding or DSO calculation does not directly measure collection efficiency. For customers that meet certain criteria, we have agreed to extend payment terms beyond our customary terms. Management believes that it has established effective credit control procedures, and historically has experienced relatively insignificant collection problems.

Our business historically has been subject to seasonal fluctuations and this is expected to continue in the future. Cash flows fluctuate as a result of this seasonality. Historically, the first quarter shows an excess of customer collections over customer billings. This results in positive cash flow. The increased activity associated with periods of higher demand (typically commencing late second or early third quarter and continuing well into the fourth quarter) causes an excess of customer billings over customer collections. This cyclical growth in customer receivables consumes available cash. However, there is no assurance that this seasonal trend will occur in the future or to what degree it will continue to be impacted in 2021 by the pandemic.

Cash used in investing activities for the three and nine months ended September 30, ~~2020~~2021 was $8$10 million and ~~$36~~$25 million, respectively, as compared with ~~$15~~$8 million and $36 million infor the same periods ~~of 2019,~~in 2020, primarily for capital expenditures. Capital expenditures in the three and nine months ended September 30, ~~2020 was~~2021 were primarily related to continuing investments in building and leasehold improvements and technology and facilities equipment. Capital expenditures in ~~the nine months ended September 30,~~ 2020 ~~also~~ included ~~our~~the purchase of a less-than-truckload digital online shipping platform. Total anticipated capital expenditures in ~~2020~~2021 are currently estimated to be ~~$50~~$40 million. This includes routine capital expenditures and investments in technology.

~~Cash from financing activities during the three months ended September 30, 2020 was $121 million~~ ~~as compared with cash used in financing activities of~~ ~~$1 million in the same period in 2019.~~ Cash used in financing activities during the three and nine months ended September 30, ~~2020~~2021 was $14 million~~$238~~ and $233 million, respectively, as compared with ~~$269~~cash from financing activities of $121 million and cash used in financing activities of $238 million for the same ~~period~~periods in 2019. During the three months ended September 30, 2020, we did not repurchase any common stock. During the three months ended September 30, 2019, we used cash to repurchase 0.9 million shares of common stock. During the nine months ended September 30, 2020, we used cash to repurchase 4.4 million shares of common stock compared to 4.1 million in the same period in 2019.2020. We use the proceeds from stock option exercises, employee stock purchases and available cash to repurchase our common stock on the open market to limit the growth in outstanding shares. During the three and nine months ended September 30, 2021 we used cash to repurchase 0.6 million and 2.0 million shares of common stock, respectively, compared to none and 4.4 million in the same periods in 2020.

We follow established guidelines relating to credit quality, diversification and maturities of our investments to preserve principal and maintain liquidity. Historically, our investment portfolio has not been adversely impacted by disruptions occurring in the credit markets. However, there can be no assurance that our investment portfolio will not be adversely affected in the future.

We cannot predict what further impact growing uncertainties in the global economy, political uncertainty nor the COVID-19 pandemic may have on our operating results, freight volumes, pricing, amounts advanced on behalf of our customers, changes in consumer demand, carrier stability and capacity, customers’ abilities to pay or on changes in competitors' behavior.

We maintain international unsecured bank lines of credit. At September 30, ~~2020,~~2021, we were contingently liable for ~~$72~~$70 million from standby letters of credit and guarantees. The standby letters of credit and guarantees relate to obligations of our foreign subsidiaries for credit extended in the ordinary course of business by direct carriers, primarily airlines, and for duty and tax deferrals available from governmental entities responsible for customs and value-added-tax (VAT) taxation. The total underlying amounts due and payable for transportation and governmental excises are properly recorded as obligations in the accounting records of the respective foreign subsidiaries, and there would be no need to record additional expense in the unlikely event the parent company is required to perform.

			Payments due by period										Payments due by period
In thousands	Total		Less than 1 year		1 - 3 years		3 - 5 years		After 5 years		Total		Less than 1 year		1 - 3 years		3 - 5 years		After 5 years
Contractual Obligations:
Operating leases, including imputed interest	$	499,331		86,689		147,136		101,332		164,174	$	519,007		98,813		159,391		111,833		148,970
Unconditional purchase obligations		117,101		117,101		—		—		—		320,316		320,316		—		—		—
Technology, equipment and construction purchase obligations		37,924		23,067		14,677		87		93		79,458		32,680		28,741		17,937		100
Total contractual cash obligations	$	654,356		226,857		161,813		101,419		164,267	$	918,781		451,809		188,132		129,770		149,070

We typically enter into short-term unconditional purchase obligations with asset-based providers reserving space on a guaranteed basis. The pricing of these obligations varies to some degree with market conditions. We only enter into agreements that management believes we can fulfill. In the regular course of business, we also enter into agreements with service providers to maintain or operate equipment, facilities or software that ~~can~~may be longer than one year. We also regularly have contractual obligations for specific projects related to improvements of our owned or leased facilities and information technology infrastructure.

Our foreign subsidiaries regularly remit dividends to the U.S. parent company after evaluating their working capital requirements and funds necessary to finance local capital expenditures. In some cases, our ability to repatriate funds from foreign operations may be subject to foreign exchange controls. At September 30, ~~2020,~~2021, cash and cash equivalent balances of ~~$567~~$951 million were held by our non-United States subsidiaries, of which ~~$13~~$39 million was held in banks in the United States. Earnings of our foreign subsidiaries are not considered to be indefinitely reinvested outside of the United States.

We are exposed to market risks in the ordinary course of our business. These risks are primarily related to foreign exchange risk and changes in short-term interest rates. The potential impact of our exposure to these risks is presented below:

We conduct business in many different countries and currencies. Our business often results in billings issued in a country and currency that differs from that where the expenses related to the service are incurred. In the ordinary course of business, we create numerous intercompany transactions and may have receivables, payables and currencies that are not denominated in the local functional currency. This brings foreign exchange risk to our earnings. The principal foreign exchange risks to which Expeditors is exposed include Chinese Yuan, Euro, Mexican Peso, Canadian Dollar and British Pound.

Foreign exchange rate sensitivity analysis can be quantified by estimating the impact on our earnings as a result of hypothetical changes in the value of the U.S. dollar, our functional currency, relative to the other currencies in which we transact business. All other things being equal, an average 10% weakening of the U.S. dollar, throughout the nine months ended September 30, ~~2020,~~2021, would have had the effect of raising operating income by approximately ~~$48~~$81 million. An average 10% strengthening of the U.S. dollar, for the same period, would have the effect of reducing operating income by approximately ~~$39~~$67 million. This analysis does not take into account changes in shipping patterns based upon this hypothetical currency fluctuation. For example, a weakening in the U.S. dollar would be expected to increase exports from the United States and decrease imports into the United States over some relevant period of time, but the exact effect of this change cannot be quantified without making speculative assumptions.

We currently do not use derivative financial instruments to manage foreign currency risk and only enter into foreign currency hedging transactions in limited locations where regulatory or commercial limitations restrict our ability to move money freely. Any such hedging activity throughout the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 was insignificant. For the three months ended September 30, 2021 net foreign currency gains were less than $1 million. For the nine months ended September 30, 2021, net foreign currency losses were approximately $1 million. During both the three and nine months ended September 30, 2020, net foreign currency losses were approximately $9 million. ~~During the three and nine months ended September 30, 2019, net foreign currency losses were approximately $1 million and $5 million, respectively.~~ We had no foreign currency derivatives outstanding at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. We instead follow a policy of accelerating international currency settlements to manage foreign exchange risk relative to intercompany billings. As of September 30, ~~2020,~~2021, we had approximately ~~$111~~$165 million of net unsettled intercompany transactions. The majority of intercompany billings are resolved within 30 days.

At September 30, ~~2020,~~2021, we had cash and cash equivalents of ~~$1,466~~$1,820 million of which ~~$907~~$860 million was invested at various short-term market interest rates. Other than our recorded lease liabilities, we had no long-term obligations or debt at September 30, ~~2020.~~2021. A hypothetical change in the interest rate of 10 basis points at September 30, ~~2020~~2021 would not have a significant impact on our earnings. In management’s opinion, there has been no material change in our interest rate risk exposure in the third quarter of ~~2020.~~2021.

We carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report at the reasonable assurance level.

There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As a result of the pandemic, many of our employees are working remotely and are able to do so within our established internal controls over financial reporting.

We are developing a new accounting system, which is being implemented on a worldwide basis over the next several years. This system is expected to improve the efficiency of certain financial and transactional processes and reporting. This transition affects the processes that constitute our internal control over financial reporting and requires testing for operating effectiveness.

Certain enhancements to our system of internal controls have been implemented to strengthen procedures related to the matters discussed in Note 9 to the unaudited consolidated condensed financial statements contained in this report on Form 10-Q.

Our management has confidence in our internal controls and procedures. Nevertheless, our management, including Expeditors’ Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors or intentional fraud. An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all of our control issues and instances of fraud, if any, have been detected.

Expeditors is involved in claims, lawsuits, government investigations and other legal matters that arise in the ordinary course of business and are subject to inherent uncertainties. Currently, in management's opinion and based upon advice from legal advisors, none of these matters are expected to have a significant effect on our operations, cash flows or financial position. As of September 30, ~~2020,~~2021, the amounts accrued for these claims, lawsuits, government investigations and other legal matters are not significant to our operations, cash flows or financial position. At this time, we are unable to estimate any additional loss or range of reasonably possible losses, if any, beyond the amounts recorded, that might result from the resolution of these matters.

In addition to the other information set forth in this report, careful consideration should be given to the risk factors under Item 1A Risk Factors in our Annual Report on Form 10-K filed on February ~~21, 2020.~~19, 2021. There have been no material changes in Expeditors' risk factors from those disclosed under Item 1A Risk Factors in our annual report on Form 10-K filed on February ~~21, 2020,~~19, 2021, except for the following:

Any reduction in international commerce or disruption in global trade may adversely impact our business and operating results.

Expeditors primarily provides services to customers engaged in international commerce. Everything that affects international trade has the potential to expand or contract our primary market and adversely impact our operating results. For example, international trade is influenced by:

•changes in and application of international and domestic customs, trade and security regulations;

•changes in labor and other costs including the potential impacts of inflation;

•increased global concerns regarding working conditions and environmental sustainability;

•changes in consumer attitudes regarding goods made in countries other than their own;

•changes in the price and readily available quantities of oil and other petroleum-related products.

Our industry is highly competitive, and failure to compete or respond to customer requirements could damage our business and results of operations.

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. Nevertheless, many of these competitors have significantly more resources than Expeditors, and are actively pursuing acquisition opportunities and are developing new technologies to gain competitive advantages. Depending on the location of the shipper and the importer, we must compete against both the niche players, larger entities including carriers, and emerging technology companies. The primary competitive factors are price and quality of service. Many larger customers utilize the services of multiple logistics providers. Customers regularly solicit bids from competitors in order to improve service and to secure favorable pricing and contractual terms such as longer payment terms, fixed-price arrangements, higher or unlimited liability limits and performance penalties. Increased competition and competitors' acceptance of expanded contractual terms coupled with customers’ dissatisfaction with elevated rates, scarce capacity and extended transit times could result in loss of business, reduced revenues, reduced margins, higher operating costs or loss of market share, any of which would damage our results of operations, cash flows and financial condition.

In November 2001, Expeditors' Board of Directors authorized a Discretionary Stock Repurchase Plan for the purpose of repurchasing our common stock in the open market to reduce the issued and outstanding stock down to 200 million shares. Subsequently, the Board of Directors has from time to time increased the amount of our common stock that may be repurchased. The Board of Directors last authorized repurchases down to 160 million shares of common stock in November 2018. The maximum number of shares available for repurchase under this plan will increase as the total number of outstanding shares increases. This authorization has no expiration date. ~~There were no share repurchases during the third quarter of 2020. The maximum number of shares that may yet be purchased under the plan as of September 30, 2020 was 9,231,495.~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Washington		91-1069248
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

1015 Third Avenue, Seattle, Washington		98104
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		EXPD		NASDAQ Global Select Market

~~Service Providers~~ Operational Risks We are dependent on our personnel and any inability to hire, develop or retain our employees may have a negative impact on our operations. Identifying, recruiting, hiring, training and retaining employees is essential to our ability to operate and deliver our services, ability to grow and ultimately our future profitability. The global pandemic has caused disruptions to our work environment by requiring the majority of employees to work remotely. As the pandemic restrictions ease, we are requiring employees to return to the office. As a result, for those individuals that prefer working remotely, we may experience a higher degree of turnover and lower employee satisfaction in the near future. Further, this could inhibit our ability to identify, recruit and hire new employees. We cannot predict how this may affect employees’ habits, preferences nor the impact it may have on our Company’s culture and our ability to continue to retain and attract talented employees who have become accustomed to a remote work environment. We believe that our compensation programs, which have been in place since we became a publicly traded entity, are among the unique characteristics responsible for differentiating our performance from that of many of our competitors. Significant changes to compensation programs or significant declines in our operating income or operating losses could impact our ability to attract and retain key personnel. Effective succession planning is an important element of our programs. Failure to ensure an effective transfer of knowledge and smooth transitions involving key employees could adversely affect our business by hindering our ability to execute our business strategies and impacting our level of service. We must continue to develop and retain management personnel to address issues of succession planning. We rely on service providers, such as air, ocean and ground freight carriers, and if they have insufficient capacity available relative to market demand, it may adversely impact our business and operating results. As a non-asset based provider of global logistics services, Expeditors depends on a variety of asset-based service providers, including air, ocean and ground freight carriers. Our ability to deliver our services depends on service providers’ having sufficient capacity available to purchase. When market demand significantly exceeds available capacity in a given market, which has been increasingly the case for various services and markets since the beginning of the pandemic in 2020, we may not always be able to find acceptable transportation solutions to meet our customers’ needs or the routing and delivery of freight may be subject to delays that are outside of our control. Quality customer service is a key element of the Company’s success, and such challenges in meeting our customers’ needs and requirements may result in loss of business and consequently negatively affect our operating results.		As a non-asset based provider of global logistics services, Expeditors depends on a variety of asset-based service providers, including air, ocean and ground freight carriers. The quality and profitability of our services depend upon effective selection and oversight of our service providers. COVID-19 places significant stress on our air, ocean and freight ground carriers, which may continue to result in reduced carrier capacity or availability, pricing volatility or more limited carrier transportation schedules which could adversely impact our operations and financial results. During the pandemic, air carriers have been particularly affected having to cancel flights due to travel restrictions resulting in dramatic drops in revenues, historical losses and liquidity challenges. Uncertainty over recovery of demand for passenger air travel, in particular business travel, to pre-pandemic levels means air carriers’ operations and financial stability may be adversely affected long term. Ocean carriers have incurred significant operating losses in recent years, further exacerbated by trade reductions from COVID-19 measures, and are highly leveraged with debt. Additionally, several ocean carriers have consolidated, with the potential for more to occur in the future. Changes in the financial stability, operating capabilities and capacity of asset-based carriers and capacity allotment made available to Expeditors by asset-based carriers affects us in unpredictable ways. Any combination of reduced carrier capacity or availability, pricing volatility or more limited carrier transportation schedules, such as those caused by the pandemic, could further negatively affect our ability to execute services and maintain profitability. Expeditors cannot predict whether relief measures extended by certain governments will be effective in supporting the financial viability of carriers nor can we predict the long-term effects of this crisis on carriers’ financial stability and ability to provide services. Additionally, Expeditors' carriers are subject to increasingly stringent laws, which could, directly or indirectly, have a material adverse effect on our business. Future regulatory developments in the U.S. and abroad could adversely affect operations and increase operating costs in the transportation industry, which in turn could increase our purchased transportation costs. If we are unable to pass such costs on to our customers, our business and results of operations could be materially adversely affected.

~~Economic Conditions~~		The global economy has entered a recession as a result of the pandemic, which has affected trade and could further affect demand for our services. Continued unfavorable economic conditions will result in lower freight volumes and adversely affects Expeditors' revenues, operating results and cash flows. These conditions should they continue for extended period of time would further adversely affect our customers and service providers. Should our customers’ ability to pay deteriorate, additional bad debts may be incurred.

~~Key Personnel~~		Identifying, training and retaining key employees is essential to continued growth and future profitability. Effective succession planning is an important element of our programs. Failure to ensure an effective transfer of knowledge and smooth transitions involving key employees could adversely affect our business by hindering our ability to execute our business strategies and impacting our level of service. We must continue to develop and retain management personnel to address issues of succession planning. We believe that our compensation programs, which have been in place since we became a publicly traded company, are among the unique characteristics responsible for differentiating our performance from that of our competitors. Significant changes to compensation programs or significant declines in our operating income or operating losses could impact our ability to attract and retain key personnel. The global pandemic has caused disruptions to our work environment by requiring the majority of employees to work remotely. We cannot predict how this may affect employees’ habits, preferences nor the impact it may have on our Company’s culture and our ability to continue to retain and attract talented employees who have become accustomed to a remote work environment.

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans		Maximum number of shares that may yet be purchased under the plans
July 1-31, 2021		-	$	0.00		-		9,890,312
August 1-31, 2021		232,430		121.94		232,430		9,708,090
September 1-30, 2021		380,386		126.85		380,386		9,392,354
Total		612,816	$	124.99		612,816		9,392,354

Exhibit Number		Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2020,~~2021, has been formatted in Inline XBRL.


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

	Three Months ended September 30, 2020
	As Reported		Adjustments			As Corrected
Revenues:
Airfreight services	$	1,093,550	$	(110,351	)	$	983,199
Ocean freight and ocean services		612,858		(3,042	)		609,816
Customs brokerage and other services		758,389		(2,691	)		755,698
Total revenues¹		2,464,797		(116,084	)		2,348,713

Directly related transportation operating expenses:
Airfreight services	$	833,689	$	(110,349	)	$	723,340
Ocean freight and ocean services		455,072		(3,044	)		452,028
Customs brokerage and other services		441,657		(2,691	)		438,966
Total directly related transportation operating expenses¹		1,730,418		(116,084	)		1,614,334

	Nine Months ended September 30, 2020
	As Reported		Adjustments			As Corrected
Revenues:
Airfreight services	$	3,237,179	$	(328,728	)	$	2,908,451
Ocean freight and ocean services		1,597,997		(7,456	)		1,590,541
Customs brokerage and other services		2,112,117		(7,551	)		2,104,566
Total revenues¹		6,947,293		(343,735	)		6,603,558

Directly related transportation operating expenses:
Airfreight services	$	2,450,931	$	(328,726	)	$	2,122,205
Ocean freight and ocean services		1,185,154		(7,458	)		1,177,696
Customs brokerage and other services		1,212,102		(7,551	)		1,204,551
Total directly related transportation operating expenses¹		4,848,187		(343,735	)		4,504,452

		EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

November 4, ~~2020~~2021		/s/ JEFFREY S. MUSSER
		Jeffrey S. Musser, President, Chief Executive Officer and Director

November 4, ~~2020~~2021		/s/ BRADLEY S. POWELL
		Bradley S. Powell, Senior Vice President and Chief Financial Officer