Expeditors International of Washington (EXPD) 10-K risk factor changes: FY2019 vs FY2018

| Service Providers | | 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, management and discipline of service providers. In recent years, many of our service providers have incurred significant operating losses 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 could affect us in unpredictable ways. Any combination of reduced carrier [removed: capacity,] [added: capacity or availability,] pricing volatility or more limited carrier transportation [removed: schedules] [added: schedules, such as those caused by the Novel Coronavirus,] could negatively impact our ability to [added: execute services and] maintain historical profitability. 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 [added: the] transportation [removed: industries,] [added: 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. |

| Regulatory Environment | | Expeditors is affected by ever increasing regulations from a number of sources in the United States and in foreign locations in which we operate. Many of these regulations are complex and require varying degrees of interpretation, including those related to [added: handling dangerous and hazardous materials,] trade compliance, data privacy, [added: environmental,] employment, compensation and competition, and may result in unforeseen costs. In reaction to the continuing global terrorist threat, governments around the world are continuously enacting or updating security regulations. These regulations are multi-layered, increasingly technical in nature and characterized by a lack of harmonization of substantive requirements among various governmental authorities. Furthermore, the implementation of these regulations, including deadlines and substantive requirements, can be driven by regulatory urgencies rather than industry's realistic ability to comply. Failure to consistently and timely comply with these regulations, or the failure, breach or compromise of our policies and procedures or those of our service providers or agents, may result in increased operating costs, damage to our reputation, difficulty in attracting and retaining key personnel, restrictions on operations or fines and penalties. |

| Taxes | | Expeditors is subject to [removed: many taxes] [added: taxation] in the United States [added: (Federal, state] and [added: local) as well as many] foreign [removed: jurisdictions.] [added: jurisdictions including the People’s Republic of China, including Hong Kong, Taiwan, Vietnam, India, Mexico, Canada, Netherlands and the United Kingdom.] In many of these jurisdictions, the tax laws are very complex and are open to different interpretations and application. Tax authorities frequently implement new taxes and change their tax rates and rules, including interpretations of those rules. [added: The timing of the resolution of income tax examinations can be highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts recorded. It is reasonably possible that within the next twelve months we will undergo further audits and examinations by various tax authorities and possibly may reach resolution related to income tax examinations covering one or more jurisdictions and years.] In December 2017, the United States made significant changes to its tax laws, [added: still subject to issuance of new regulations and interpretation,] which added complexity and uncertainty in calculating corporate tax liabilities. We are regularly under audit by tax authorities, including transfer pricing inquiries. Although we believe our tax estimates are reasonable, the final determination of tax audits, including any potential penalties and interest, could be materially different from our tax provisions and accruals and negatively impact our financial results. |

| [removed: Litigation/Investigations] [added: Litigation/ Investigations] | | As a multinational corporation, Expeditors is subject to formal or informal investigations from governmental authorities or others in the countries in which we do business. In addition, we may become subject to civil litigation with our customers, service providers and other parties with whom we do business. These investigations and litigation may require significant management time and could cause us to incur substantial additional legal and related costs, which may include fines, penalties or damages that could have a materially adverse impact on our financial results. |

| Economic Conditions | | The global economy and capital and credit markets continue to experience uncertainty and volatility. Unfavorable changes in economic conditions may result in lower freight volumes and adversely affect Expeditors' revenues and operating results, as experienced in [removed: 2009] [added: 2009, 2012] and [removed: 2012.] [added: 2019.] These conditions may adversely affect certain of our customers and service providers. Were that to occur, our revenues and net earnings could [removed: also] [added: continue to] be adversely affected. Should our customers’ ability to pay deteriorate, additional bad debts may be incurred. |

| Predictability of Results | | Expeditors is not aware of any accurate means of forecasting short-term customer requirements. However, long-term customer satisfaction depends upon our ability to meet these unpredictable short-term customer requirements. Personnel costs, our single largest expense, are always less flexible in the very near term as we must staff to meet uncertain demand. As a result, short-term operating results could be disproportionately affected. A significant portion of Expeditors' revenues is derived from customers in 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 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. Volatile market conditions can create situations where rate increases charged by carriers and other service providers are implemented with little or no advance notice. We often [removed: times] cannot pass these rate increases on to our customers in the same time frame, if at all. As a result, our yields and margins can be negatively impacted, as recently [removed: experienced, particularly with ocean freight.] [added: experienced.] |

| Catastrophic Events | | A disruption or failure of Expeditors' systems or operations in the event of a major earthquake, weather event, cyber-attack, terrorist attack, strike, civil unrest, [added: mass population dislocations,] pandemic or other catastrophic event could cause delays in providing services or performing other mission-critical functions. Our corporate headquarters and certain other critical business operations are in the Seattle, Washington area, which is near major earthquake faults. A catastrophic event that results in the destruction or disruption of any of our critical business or information technology systems could harm our ability to conduct normal business operations and our operating results. |

| | | • natural disasters and pandemics, including current effects of precautionary measures for the Novel Coronavirus outbreak; |

14.

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| RISK FACTORS | | DISCUSSION AND POTENTIAL SIGNIFICANCE |

| | | • natural disasters and pandemics; |

11.

12.

Expeditors International of Washington, Inc. [removed: is] [added: provides] a [added: full suite of] global logistics [removed: company.][added: services.]

[removed: The difference between the rate billed to our customers (the sell rate) and the rate we pay to the carrier (the buy rate) is termed “net revenue” (a non-GAAP measure), “yield" or "margin."] 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.

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 [added: import services such as] arranging for delivery.

The following chart shows [removed: net] revenues by geographic areas of responsibility for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016:][added: 2017:]

[removed: ][added: ]

North Asia is our largest export oriented region and accounted for [removed: 35%] [added: 31%] of revenues, [removed: 22%] [added: 36%] of [removed: net revenues] [added: directly related cost of transportation] and [removed: 35%] [added: other expenses and 33%] of operating income for the year ended December 31, [removed: 2018.][added: 2019.]

North Asia's [removed: net revenues as a percentage] [added: directly related cost] of [removed: revenues is lower] [added: transportation and other expenses are higher] than other segments due to the largely export nature of [added: the] operations in that region.

From the inception of our company, management has believed that the elements required for a successful global [removed: services] [added: service] organization can only be assured through recruiting, training, and ultimately retaining superior personnel.

We believe that our greatest challenge is [removed: now] [added: now,] and always has [removed: been] [added: been,] perpetuating a consistent global corporate [removed: culture,] [added: culture] which demands:

| [added: |] • | Total dedication to providing superior customer service; |

| [added: |] • | Compliance with our policies and procedures and government regulations; |

| [added: |] • | Aggressive marketing of all of our service offerings; |

| [added: |] • | A positive, safe work environment that is inclusive and free from discrimination and harassment; |

| [added: |] • | Ongoing development of key employees and management personnel; |

| [added: |] • | Creation of unlimited advancement opportunities for employees dedicated to hard work, personal growth and continuous improvement; |

| [added: |] • | Individual commitment to the identification and mentoring of successors for every key position so that when change occurs, a qualified and well-trained internal candidate is ready to step forward; and |

| [added: |] • | Continuous identification, design and implementation of system solutions and differentiated service offerings, both technological and otherwise, to meet and exceed the needs of our customers while simultaneously delivering tools to make our employees more efficient and [removed: more] effective. |

Although airline profitability has improved, many [removed: air] carriers remain highly leveraged with debt.

International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, [removed: and] laws and policies relating to tariffs, trade restrictions, foreign investments and taxation.

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 [added: and on the trade shipping lanes] in which we conduct business and the future impact that these events may have on international [removed: trade and] [added: trade,] oil [removed: prices.][added: prices and security costs.]

Additionally, [removed: while overall global demand has recently increased,] carriers continue to take delivery of new and larger ships, which [removed: creates additional] [added: may increase] capacity.

Carriers also face new regulatory requirements that [removed: become] [added: became] effective in 2020 requiring reductions in the [removed: use of] [added: sulfur in] marine [removed: fuel sulfur,] [added: fuel,] which [removed: is expected to increase] [added: are increasing] their operating and capital costs.

[removed: Currently, there] [added: There] is uncertainty as to how [added: new regulatory requirements and] changes in oil prices will continue to impact future buy rates.

Because fuel is an integral part of carriers' costs and impacts both our [removed: cargo space] buy rates and [removed: our] sell [removed: rates to customers,] [added: rates,] we would expect our [removed: gross] revenues and costs to be impacted as carriers adjust rates for the effect of changing fuel prices.

To the extent that we are unable to pass through any increases to our customers, this could adversely affect our [removed: net revenues.][added: operating income.]

The global economic [removed: environment] and trade [removed: growth] [added: environments] remain uncertain.

| [added: |] • | accrual of loss contingencies; |

| [added: |] • | accrual of various tax liabilities and contingencies; |

| [added: |] • | accounts receivable valuation; and |

| [added: |] • | accrual of insurance liabilities for the portion of the related exposure that we have self-insured. |

An estimated loss from a contingency, such as a legal proceeding, claim or government investigation, is [removed: accrued] [added: recorded] by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.

Disclosure of a loss contingency is [removed: required] [added: made] if there is at least a reasonable possibility that a significant loss has been incurred.

In determining whether a loss should be [removed: accrued,] [added: recorded,] management evaluates several factors, including advice from outside legal counsel, in order to estimate the likelihood of an unfavorable outcome and to make a reasonable estimate of the amount of loss or range of reasonably possible loss.

As discussed in Note 1.F to the consolidated financial statements, earnings of [removed: the Company's] [added: our] foreign subsidiaries are not considered to be indefinitely reinvested outside of the United States.

See Note [removed: 5] [added: 7] to the consolidated financial statements for impacts associated with U.S. tax reform under the 2017 Tax Act.

Accounting for income taxes involves [added: significant] estimates and judgments.

Management believes [added: that] our tax positions, including intercompany transfer pricing policies, are reasonable and [removed: consistent.][added: that they are consistently applied.]

[removed: As a matter of course, Expeditors is audited by various taxing authorities, and sometimes these] [added: Sometimes] audits [added: and examinations] result in proposed assessments where the ultimate resolution could result in significant additional tax, penalties and interest payments being required.

Our estimate of any ultimate tax liability contains assumptions based on [removed: past experiences,] [added: our experience,] judgments about potential actions by taxing jurisdictions as well as judgments about the likely outcome of issues that have been raised by the [added: taxing jurisdiction.]

[removed: We] [added: Though we] believe the estimates and assumptions used to support the evaluation of our tax positions are [removed: reasonable.][added: reasonable, the actual amount of any change could vary significantly depending on the ultimate timing and nature of its resolution.]

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.

We also provide other value added services at destination, such as warehousing and distribution, time-definitive transportation services and consulting.

The People’s Republic of China, including Hong Kong, represented more than 85% of North Asia revenues, 86% of directly related cost of transportation and other expenses and 81% operating income for the year ended December 31, 2019.

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We expect China trade, and hence our operations, to be affected by the recent outbreak of Novel Coronavirus (COVID-19) that began in China and was declared by the World Health Organization as a global health emergency.

As precautionary measures, the government in China extended the Lunar New Year Holiday into February 2020 and has implemented travel restrictions and closures of certain central China ports and government offices.

Additionally, factories have experienced extended closures and certain airlines are cancelling flights to and from China.

As a result, certain of our central China offices have experienced closures and limited operations and shipments are being rerouted or delayed by customers and service providers, who are taking their own precautionary measures.

Also, available airfreight capacity could be reduced affecting our ability to efficiently route our customers’ freight.

Any such conditions of operations, for an extended period of time would result in a reduction in shipments that could negatively affect our results of operations in 2020.

In addition to traditional supply chain movements, we also believe this may have a further impact to global supply chains through potential shortages of raw materials, parts and supplies.

In response to governments implementing higher tariffs on imports, some customers have begun shifting manufacturing to other countries which could negatively impact us.

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP).

Preparing our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses.

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We are subject to taxation in various states and in many foreign jurisdictions including the People’s Republic of China, including Hong Kong, Taiwan, Vietnam, India, Mexico, Canada, Netherlands and the United Kingdom.

We are under, or may be subject to, audit or examination and assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2009 and thereafter.

The total amount of our tax contingencies may increase in 2020.

In addition, changes in state, federal, and foreign tax laws and changes in interpretations of these laws may increase our existing tax contingencies.

The timing of the resolution of income tax examinations can be highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ significantly from the amounts recorded.

It is reasonably possible that within the next 12 months we may undergo further audits and examinations by various tax authorities and it is also possible that we may reach resolution related to income tax examinations in one or more jurisdictions.

These assessments or settlements could result in changes to our contingencies related to positions on tax filings in future years and may increase the amount of tax expense we recognize as well as the potential for penalties and interest being incurred.

This section of this Form 10-K generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018.

Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

| | | | | | | | | | | | | | | Percentage change |

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| In thousands | | 2019 | | | | 2018 | | | | 2017 | | | | 2019 vs. 2018 |

Airfreight services revenues decreased 10% in 2019, as compared with 2018, primarily due to a 9% decrease in sell rates and a 6% decrease in tonnage as a result of the softening of market demand due to slowing of the global economy and continuing inter-governmental trade disputes.

North Asia, North America and Europe directly related expenses decreased 16%, 18% and 15%, respectively, in 2019.

Most regions experienced decreases in tonnage with the largest being North Asia, North America and Europe with declines in tonnage of 9%, 5% and 5% respectively, in 2019.

18.

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We are subject to taxation in multiple U.S. and foreign tax jurisdictions.

taxing jurisdiction.

However, final determinations of tax liabilities, penalties and interest could be materially different from estimates.

Management believes that net revenues are a better measure than total revenues when analyzing and discussing management's effectiveness in managing our principal services since total revenues earned by Expeditors as a freight consolidator include the carriers’ charges to us for carrying the shipment, whereas revenues earned by Expeditors in our other capacities include primarily the commissions and fees actually earned by us.

Net revenue is one of our primary operational and financial measures and demonstrates our ability to manage sell rates to customers with our ability to concentrate and leverage our purchasing power through effective consolidation of shipments from multiple customers utilizing a variety of transportation carriers and optimal routings.

Using net revenue also provides a commonality for comparison among various services.

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| | | 2018 | | | | | | | 2017 | | | | | | | 2016 | | | | | | |

| In thousands | | Amount | | | | Percent of net revenues | | | Amount | | | | Percent of net revenues | | | Amount | | | | Percent of net revenues | | |

| Net revenues | | 861,139 | | | | 33 | % | | 750,271 | | | | 32 | % | | 701,180 | | | | 32 | % | |

| Net revenues | | 587,586 | | | | 22 | | | 563,305 | | | | 24 | | | 538,795 | | | | 25 | | |

| Net revenues | | 1,171,648 | | | | 45 | | | 1,005,613 | | | | 44 | | | 924,061 | | | | 43 | | |

| Total net revenues | | 2,620,373 | | | | 100 | | | 2,319,189 | | | | 100 | | | 2,164,036 | | | | 100 | | |

Airfreight services:

Airfreight services revenues increased 14% in 2018, as compared with 2017, primarily due to higher sell rates in response to increased buy rates resulting from higher overall market demand and tonnage growth of 3%.

Airfreight services net revenues in 2018 increased 15%, as compared with 2017.

This was principally due to a 15% increase in net revenue per kilo and a 3% growth in tonnage.

Average net revenue per kilo increased in most regions primarily due to higher average sell rates that increased commensurate with higher average buy rates.

North Asia net revenues increased by 17% despite a tonnage decrease of 2%, as we adjusted our sell rates, primarily in response to higher carrier buy rates, and achieved a better mix of business.

In 2017, carriers significantly increased pricing in North Asia and South Asia as a result of higher demand relative to available capacity.

At the same time, customers are increasingly utilizing airfreight to improve speed to market.

Ocean freight and ocean services revenues and expenses increased 7% and 8%, respectively, in 2018, as compared with 2017, primarily due to a 5% increase in container volume and growth in direct ocean forwarding and order management.

Ocean freight consolidation net revenues decreased 2% in 2018, as compared with 2017.

This decrease was due primarily to lowering our sell rates in response to competitive market conditions, partially offset by a 5% increase in volume.

North America ocean freight and ocean services net revenues increased 4% in 2018, as compared with 2017, primarily due to higher order management volumes.

Europe net revenues increased 8% in 2018 as compared with 2017, primarily due to growth in direct ocean freight forwarding.

North Asia net revenues increased 3% in 2018, as compared with 2017, as growth in direct ocean forwarding and order management was largely offset by lower net revenue per container.

MAIR net revenues increased 8% in 2018, as compared with 2017, primarily due to higher direct ocean forwarding revenues.

Customs brokerage and other services:

Customs brokerage and other services expenses increased 55% in 2018, as compared with 2017, principally as a result of higher volumes.

In conjunction with the adoption of the new revenue recognition standard, we analyzed contracts with customers in our warehouse and distribution business.

In 2018, we changed our presentation of certain warehouse and distribution revenues from a net to a gross basis, which increased both revenues and operating expenses by approximately $225 million in 2018.

Customs brokerage and other services net revenues increased 17% in 2018, as compared with 2017, primarily as a result of an increase in customs brokerage, road freight and distribution volumes, particularly in North America, Europe and North Asia.

Europe net revenues increased 28%, primarily due to higher customs brokerage, road freight and distributions services net revenues.

North Asia net revenues increased 23%, primarily due to higher customs brokerage volumes.

Overhead expenses:

Our business often results in [removed: revenue] billings issued in a country and currency that differs from that where the expenses related to the service are incurred.

All other things being equal, an average 10% weakening of the U.S. dollar, throughout the year ended December 31, [removed: 2018,] [added: 2019,] would have had the effect of raising operating income [added: by] approximately [removed: $55] [added: $51] million.

An average 10% strengthening of the U.S. dollar, for the same period, would have the effect of reducing operating income [added: by] approximately [removed: $45] [added: $41] million.

This analysis does not take into account changes in shipping patterns based upon this hypothetical currency [added: fluctuation.]

Any such hedging activity throughout the year ended December 31, [removed: 2018,] [added: 2019,] was insignificant.

Net foreign currency losses were approximately [added: $9 million,] $2 million and $13 million in [added: 2019,] 2018 and 2017, [removed: respectively, and net currency gains were approximately $8 million in 2016.][added: respectively.]

We had no foreign currency derivatives outstanding at December 31, [removed: 2018] [added: 2019] and [removed: 2017.][added: 2018.]

As of December 31, [removed: 2018,] [added: 2019,] we had [removed: $42] [added: $46] million of net unsettled intercompany transactions.

At December 31, [removed: 2018,] [added: 2019,] we had cash and cash equivalents of [removed: $924] [added: $1,230] million, of which [removed: $496] [added: $813] million was invested at various short-term market interest rates.

We had no long-term debt at December 31, [removed: 2018.][added: 2019.]

A hypothetical change in the interest rate of 10 basis points at December 31, [removed: 2018] [added: 2019] 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 between [removed: 2018] [added: 2019] and [removed: 2017.][added: 2018.]

28.

fluctuation.

As a third party logistics provider, we purchase cargo space from carriers [removed: (including airlines and] [added: (such as airlines,] ocean shipping [added: lines, and trucking] lines) on a volume basis and resell that space to our customers.

We provide a broad range of [added: transportation services and] customer solutions, such as [added: customs brokerage,] order management, time-definite transportation, warehousing and distribution, temperature-controlled transit, cargo insurance, specialized cargo monitoring and tracking, and other customized logistics [added: and consulting] solutions.

In addition, our Project Cargo unit handles special project shipments that move via a single method or combination of air, ocean, and/or ground transportation and generally [removed: require] [added: requires] a high level of specialized attention because of the unusual size or nature of what is being shipped.

| [added: |] • | Airfreight Services |

| [added: |] • | Ocean Freight and Ocean Services |

| [added: |] • | Customs Brokerage and Other Services |

[removed: Air Freight] [added: Airfreight] Consolidation: as an airfreight consolidator, Expeditors purchases cargo capacity from airlines on a volume basis and resells that space to our customers at lower rates than what those customers could negotiate directly from the airlines on an individual shipment.

[removed: Air Freight] [added: Airfreight] Forwarding: as a freight forwarder, Expeditors receives and forwards individual, unconsolidated shipments, and arranges the transportation with the airline that carries the shipment.

We also generate fees for ancillary services such as shipping and customs documentation, packing, crating, insurance services, [removed: negotiation of letters of credit,] and the preparation of documentation to comply with local export and import laws.

[removed: Direct] [added: *Direct] Ocean [removed: Forwarding:] [added: Forwarding*:] when a customer contracts directly with the ocean carrier, Expeditors acts as that customer’s agent and we may receive a commission from the carrier in addition to customer handling [removed: fees.][added: fees and ancillary services.]

[removed: Through Expeditors’] [added: Order Management: Expeditors provides a range of] order [removed: management, we consolidate] [added: management services including consolidation of] cargo from many suppliers in a particular origin into the fewest possible number of containers, putting more product [removed: in] [added: into] larger and fewer containers [added: in order] to maximize [removed: space and] [added: space,] minimize [removed: cost.][added: cost and help our customers reduce their carbon footprint.]

[removed: Transcon:] Expeditors' Transcon consists of [added: multi-modal,] intra-continental ground transportation and delivery services and [removed: may be bundled together with domestic air.][added: includes value-added,]

[removed: Transcon also includes value-added,] white glove, and time-definite services.

Warehousing and Distribution Services: Expeditors’ distribution and warehousing services include distribution center management, inventory management, order fulfillment, returns programs, [removed: order level] and other [added: value-added] services.

[removed:  ][added: ]

Today Expeditors has approximately [removed: 17,500] [added: 18,000] employees and provides a complete range of global logistics services to a diversified group of customers, both in terms of industry specialization and geographic location.

As opportunities for profitable growth arise, we plan to [removed: create] [added: open] new offices.

At January 31, [removed: 2019,] [added: 2020,] Expeditors, including its majority-owned subsidiaries, is organized functionally in geographic operating segments and operates district offices in the regions identified below.

| [added: |] • | Americas (70) |

| [added: |] • | North Asia (21) |

| [added: |] • | South Asia (16) |

| [added: |] • | Europe (45) |

| [added: |] • | Middle East, Africa and India (24) |

For information concerning the amount of revenues, [removed: net revenues,] [added: directly related cost of transportation and other expenses, salaries and other] operating [added: expenses, operating] income, identifiable assets, capital [removed: expenditures, depreciation and amortization] [added: expenditures] and equity attributable to the geographic areas in which we conduct our business, see Note 10 to the consolidated financial statements.

[removed: In 2018,] Expeditors [removed: continued] [added: continues to focus on] executing key strategic initiatives that are [removed: focused and aligned] [added: designed] to achieve long-term earnings growth.

The strategic plan is to grow [added: our] business by focusing on the right markets and, within each market, on the right [removed: customers] [added: customers,] that lead to profitable business growth.

[removed: As] [added: While] we continue to [removed: expand] [added: emphasize expanding] our business in North America, we [added: simultaneously] remain focused on growth based on three key strategic initiatives:

| [added: |] 1. | Ensure that every operating unit's base-line growth strategies for air, ocean and customs services grow at the [added: relevant market growth] rate of each [removed: unit's] [added: unit] (i.e. district or [removed: region) relevant market growth rate.] [added: region).] |

| [added: |] 2. | Align and integrate our European-Asian Pacific and European-North Americas interests to the same degree that our Asian Pacific and Americas interests have historically been aligned. This alignment is expected to result in additional growth in these markets beyond our base-line growth expectations. |

| [added: |] 3. | Leverage our long and deeply entrenched presence in China - as well as the reputation that we have with the strategic carriers servicing China - to build a stronger import presence. Our main focus remains on developing and integrating our customs systems, expertise and talent, and making investments that enhance and improve our import infrastructure and our ability to provide local delivery and support services in China. |

Expeditors has long believed that it is a competitive advantage to focus on organic growth and to utilize [removed: an] [added: a single] enterprise technology platform designed and built by logistics technology professionals for logistics professionals.

Our technology platform is built on principles of innovation, agility, collaboration, performance and consistency across the Expeditors global network to meet diverse and complex global logistics and supply [removed: chain needs.]

As a non-asset based logistics services provider, we have considerable flexibility to tailor customer-specific [removed: solutions based on a customer’s unique needs.][added: solutions.]

We offer these services across the globe on a single technology platform, in conjunction with consistent and efficient operational processes that adhere to the highest standards of [removed: compliance.][added: compliance while focusing on the individual needs of each customer.]

At Expeditors, we create strategy, process, technology and compliance programs at the corporate level, [added: in order] to drive consistency across all levels of the organization.

District offices are responsible for selling and executing Expeditors' services directly to customers and prospects and are involved in the selection of logistics service providers, in addition to ensuring that customers receive timely and [removed: efficient] [added: effective] services.

Defining our strategy at a global level [removed: and] [added: while] executing it at a regional and local level with customized supply chain solutions enables us to drive consistency and efficiency.

We believe that focus on hiring and developing [added: a diverse and] talented [removed: individuals] [added: workforce] with an emphasis on exceptional customer service, along with our incentive-based compensation program, enables us to provide exceptional service and superior financial results.

In order to meet customers' complex and [removed: industry specific] [added: industry-specific] demands, we utilize industry vertical teams throughout our network [removed: to] [added: that] focus on providing tailored solutions to different industries.

No single customer accounts for five percent or more of our [removed: revenues or net] revenues.

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

Our target market is primarily comprised of customers looking to reduce the number of brokers utilized globally; those looking to improve compliance and reporting; and those seeking opportunities to participate in special trade-incentive programs.

Transcon: Expeditors' Transcon consists of multi-modal, intra-continental ground transportation and delivery services and includes value-added, white glove, and time-definite services.

Our warehousing services are offered primarily in leased facilities utilized by multiple customers.

Customers benefit from cost savings related to space, labor, equipment and other efficiencies delivered in a transactional pricing model.

Revenues

The following charts show our 2019 revenues by service type:

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

chain needs.

We continuously monitor emerging technologies for potential applicability to our business.

We are continually enhancing our systems, including significant upgrades to core operating and accounting systems.

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.

Expeditors’ pricing is based on contract negotiations each year with our global carrier partners.

Our pricing model is flexible.

We purchase based on customer needs, and our carrier strategy determines our volume and pricing commitments.

Fixed pricing arrangements are entered into for a portion of our forecasted commitments, while spot market pricing arrangements are typically negotiated at the regional and local levels.

We offer our customers a wide carrier footprint globally to meet their changing needs.

With fewer global carriers than in the past, maintaining close relationships with our carrier partners allows us to meet our customers’ space requirements throughout the year, including during peak periods.

We offer a customized, solutions-based approach to our customers, based on the complexity of their business.

Our pricing reflects this complexity and scope, in addition to the number of declarations filed.

Our warehousing services are offered primarily in leased facilities utilized by multiple customers.

Customers benefit from cost savings related to space, labor, equipment and other efficiencies delivered in a transactional pricing model.

Certain ocean carriers are entering into traditional freight forwarding services as they pursue scale and additional market share in an effort to reduce operating costs and regain their financial footing.

We are also attentive to our Scope 3 emissions (as defined by the Greenhouse Gas Protocol, Scope 3 emissions include all other indirect emissions that occur in a company’s value chain) therefore, we are currently a member of both SmartWay and Transporte Limpio in North America.

Information about our Executive Officers

Jeffrey F.

Dickerman joined Expeditors in October 2004 as Associate Corporate Counsel and became Corporate Counsel in 2007.

Mr. Dickerman became Director, Global Legal Services in 2011 and Vice President and Associate General Counsel in 2015.

In 2019, Mr. Dickerman became Vice President, Deputy General Counsel.

In January 2020, Mr. Dickerman was appointed to Senior Vice President, General Counsel.

Prior to joining Expeditors, Mr. Dickerman was an Associate Attorney at Stoel Rives LLP.

| | |

| --- | --- |

2.

Order Management: Expeditors provides a range of order management services, collecting fees from the shipper in addition to generating fees for meeting specific customer needs.

Our customs reporting, discrepancy management and other visibility tools help our customers manage their compliance responsibilities globally.

Revenues and Net Revenues

The following charts show our 2018 revenues and net revenues (a non-GAAP measure calculated as revenues less directly related operating expenses*) by service type:

*See Management's Discussion and Analysis for a reconciliation of Net Revenues to Revenues.

Transcon is a multi-modal product, which offers time-definite, intra-continental transportation solutions, often by ground and other specialty handling services.

We do not anticipate making any material capital expenditures for environmental control purposes during 2019.

Executive Officers of the Registrant

| | | | | |

Philip M.

Coughlin joined Expeditors in October 1985 and was promoted to District Manager in August 1986.

Mr. Coughlin was elected Regional Manager in January 1991, Regional Vice President in January 1992, Senior Vice President of North America in September 1999 and Executive Vice President - North America in March 2008.

In June 2014, Mr. Coughlin was promoted to President, Global Geographies and Operations.

Mr. Coughlin was appointed Senior Vice President and Chief Strategy Officer, a newly created position, effective February 28, 2017.

As of December 31, [removed: 2018,] [added: 2019,] the amounts [removed: accrued] [added: recorded] for these claims, lawsuits, government investigations and other legal matters are not significant to our operations, cash flows or financial position.

| [removed: Q] [added: ☒] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

For the fiscal year ended December 31, [removed: 2018][added: 2019]

| [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

| Washington | [added: |] 91-1069248 |

| (State or other jurisdiction of incorporation or organization) | [added: |] (I.R.S. Employer Identification Number) |

| 1015 Third Avenue, [removed: 12th Floor,] Seattle, Washington | [added: |] 98104 |

| (Address of principal executive offices) | [added: |] (Zip Code) |

| Title of each class | | [added: Trading Symbol(s) | |] Name of each exchange on which registered |

| Common Stock, par value $.01 per share | | [added: EXPD | |] NASDAQ Global Select Market |

Yes [removed: ý] [added: ☒] No [removed: o][added: ☐]

Yes [removed: o] [added: ☐] No [removed: ý][added: ☒]

Indicate by check mark whether the registrant has submitted electronically, if any, 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 [removed: and post] such files).

| Large accelerated filer | [removed: x |] [added: ☒] | | Accelerated filer | [removed: o] [added: ☐] |

| Non-accelerated filer | [removed: o |] [added: ☐] | | Smaller reporting company | [removed: o] [added: ☐] |

| | | | [removed: |] Emerging growth company | [removed: o] [added: ☐] |

[removed: |] 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. [removed: | | | | | o |]

The aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant, based upon the closing price as of the last business day of the most recently completed second fiscal quarter ended June 30, [removed: 2018,] [added: 2019,] was approximately [removed: $12,614,798,720.][added: $12,821,403,723.]

At February [removed: 19, 2019,] [added: 18, 2020,] the number of shares outstanding of registrant’s Common Stock was [removed: 171,669,558.][added: 169,764,263.]

Portions of the definitive proxy statement for the Registrant’s [removed: 2019] [added: 2020] Annual Meeting of Shareholders to be held on May [removed: 7, 2019] [added: 5, 2020] are incorporated by reference into Part III of this Form 10-K.

| | Item 1 | [removed: [Business](#s48E3C41FC22A5DC2BAB3CD2001E6E839)] [added: [Business](#ITEM_1BUSINESS)] | [removed: [2](#s48E3C41FC22A5DC2BAB3CD2001E6E839)] [added: 3] |

| | Item 1A | [Risk [removed: Factors](#sB388A4C6300A5D09B7EAEF9E2C62877E)] [added: Factors](#ITEM_1A_RISK_FACTORS)] | [removed: [11](#sB388A4C6300A5D09B7EAEF9E2C62877E)] [added: 13] |

| | Item 1B | [Unresolved Staff [removed: Comments](#sD22AFB60E3165713A50E6D5CE7ED31BB)] [added: Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS)] | [removed: [14](#sD22AFB60E3165713A50E6D5CE7ED31BB)] [added: 16] |

| | Item 2 | [removed: [Properties](#s964743EF0C155540B23CE849B3AB08F7)] [added: [Properties](#ITEM_2___Properties)] | [removed: [14](#s964743EF0C155540B23CE849B3AB08F7)] [added: 16] |

| | Item 3 | [Legal [removed: Proceedings](#s1FFC41BE49415C14B837E676B86FF724)] [added: Proceedings](#ITEM_3___Legal_Proceedings)] | [removed: [15](#s1FFC41BE49415C14B837E676B86FF724)] [added: 16] |

| | Item 4 | [Mine Safety [removed: Disclosures](#sA06A1CE928E15F2E800D217D58365497)] [added: Disclosures](#ITEM_4___Mine_Safety_Disclosures)] | [removed: [15](#sA06A1CE928E15F2E800D217D58365497)] [added: 16] |

| | Item 5 | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sDD5E2002475F5E9292D06B49156D46F0)] [added: Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU)] | [removed: [15](#sDD5E2002475F5E9292D06B49156D46F0)] [added: 16] |

| | Item 6 | [Selected Financial [removed: Data](#sC04CD7C3F9E05370B318601FBC093996)] [added: Data](#ITEM_6_SELECTED_FINANCIAL_DATA)] | [removed: [17](#sC04CD7C3F9E05370B318601FBC093996)] [added: 18] |

| | Item 7 | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sA7CC619A719152CA91ED59CB3841EE93)] [added: Operations](#ITEM_7___Management_s_Discussion_and_Ana)] | [removed: [18](#sA7CC619A719152CA91ED59CB3841EE93)] [added: 19] |

| | Item 7A | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#sA3BA05F24AC85DCCB5606093B8B9A7AF)] [added: Risk](#ITEM_7A_QUANTITATIVE_QUALITATIVE_DISCLOS)] | [removed: [28](#sA3BA05F24AC85DCCB5606093B8B9A7AF)] [added: 30] |

| | Item 8 | [Financial Statements and Supplementary [removed: Data](#s4B01E9BA09E3579A8497C9AD8D8198C7)] [added: Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR)] | [removed: [29](#s4B01E9BA09E3579A8497C9AD8D8198C7)] [added: 30] |

| | Item 9 | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s912BB9664F1258F3AAD4983A4D01D9C6)] [added: Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC)] | [removed: [29](#s912BB9664F1258F3AAD4983A4D01D9C6)] [added: 31] |

| | Item 9A | [Controls and [removed: Procedures](#s74CA0E4F63765E0F9F7188DC06334E8D)] [added: Procedures](#ITEM_9A_CONTROLS_PROCEDURES)] | [removed: [29](#s74CA0E4F63765E0F9F7188DC06334E8D)] [added: 31] |

| | Item 9B | [Other [removed: Information](#s4F956D52F23C55B8B3AFDD69BA3A8B22)] [added: Information](#ITEM_9B_OR_INFORMATION)] | [removed: [30](#s4F956D52F23C55B8B3AFDD69BA3A8B22)] [added: 31] |

| | Item 10 | [Directors, Executive Officers and Corporate [removed: Governance](#s795BD3EA11D7592F959B346017D765C1)] [added: Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO)] | [removed: [30](#s795BD3EA11D7592F959B346017D765C1)] [added: 32] |

| | Item 11 | [Executive [removed: Compensation](#sC62CE553BB3956E3BDC5AFA2C0D5BDAF)] [added: Compensation](#ITEM_11_EXECUTIVE_COMPENSATION)] | [removed: [31](#sC62CE553BB3956E3BDC5AFA2C0D5BDAF)] [added: 32] |

| | Item 12 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s3346628DDD615C37B508A0C9E96B63DB)] [added: Matters](#ITEM_12_SECURITY_OWNERSHIP_CERTAIN_BENEF)] | [removed: [31](#s3346628DDD615C37B508A0C9E96B63DB)] [added: 32] |

| | Item 13 | [Certain Relationships and Related Transactions and Director [removed: Independence](#s9428EC01EB0B5066BC93FE87E8DB512A)] [added: Independence](#ITEM_13_CERTAIN_RELATIONSHIPS_RELATED_TR)] | [removed: [31](#s9428EC01EB0B5066BC93FE87E8DB512A)] [added: 33] |

| | Item 14 | [Principal Accounting Fees and [removed: Services](#s408B557C27475D37916095CE9FB56E30)] [added: Services](#ITEM_14_PRINCIPAL_ACCOUNTING_FEES_SERVIC)] | [removed: [31](#s408B557C27475D37916095CE9FB56E30)] [added: 33] |

| | Item 15 | [Exhibits, Financial Statement [removed: Schedules](#sC46A82174A45560BAD37D869603E3582)] [added: Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH)] | [removed: [32](#sC46A82174A45560BAD37D869603E3582)] [added: 33] |

| | Item 16 | [Form 10-K [removed: Summary](#sCE3EBC0CB62352D5897EB3D8F81DEC46)] [added: Summary](#ITEM_16_FORM_10K_SUMMARY)] | [removed: [34](#sCE3EBC0CB62352D5897EB3D8F81DEC46)] [added: 35] |

| --- | --- | --- | --- | --- |

Yes ☒ No ☐

Yes ☒ No ☐

| --- | --- | --- | --- | --- |

Yes ☐ No ☒

For the Fiscal Year Ended December 31, 2019

2.

10-K 1 a201810-k.htm 10-K

(Mark One)

| | |

| --- | --- |

| | | |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

(Check one):

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | |

1.

We [removed: lease and maintain] [added: conduct operations in] approximately [removed: 490] [added: 450] locations worldwide, of which approximately 100 are in the United [removed: States.][added: States and 22 are owned.]

These [added: owned and] leased locations are primarily located close to an airport, ocean port, or on an important border crossing.

Expeditor’s corporate headquarters are located in Seattle, Washington.

These facilities are strategically located to cover the geographic areas served by Expeditors.

Expeditors owns the following properties:

| | | |

| --- | --- | --- |

| Location | | Nature of Property |

| United States: | | |

| Washington, Seattle | | Corporate headquarters |

| California, Brisbane | | Office and warehouse building |

| California, Hawthorne | | Office and warehouse building |

| Illinois, Bensenville | | Office and warehouse building |

| New Jersey, Edison | | Office and warehouse building |

| New York, Inwood | | Office and warehouse building |

| Texas, Humble | | Office and warehouse building |

| Washington, SeaTac | | Office building |

| Washington, Spokane | | Office building |

| North Asia: | | |

| China, Beijing | | Office and warehouse building |

| China, Shanghai | | Office building |

| China, Shenzhen | | Offices |

| China, Tianjin | | Offices |

| Hong Kong, Kowloon | | Offices |

| Korea, Seoul | | Offices |

| Taiwan, Taipei | | Offices |

| Europe: | | |

| Belgium, Brussels | | Office and warehouse building |

| England, London | | Office and warehouse building |

| Ireland, Cork | | Office and warehouse building |

| Ireland, Dublin | | Office and warehouse building |

| Netherlands, Amsterdam | | Office and warehouse building |

| Other North America: | | |

| Mexico, Nuevo Laredo | | Land |

| Middle East: | | |

| Egypt, Cairo | | Office and warehouse building |

Lease terms are either on a month-to-month basis or terminate at various times through 2032.

See Note 8 to our consolidated financial statements for lease commitments.

14.

There were [removed: 754] [added: 678] shareholders of record as of February [removed: 19, 2019.][added: 18, 2020.]

| June 15, 2018 | [added: |] $ | 0.45 | |

| December 17, 2018 | [added: |] $ | 0.45 | |

| Period | | Total [removed: Number] [added: number] of [removed: Shares Purchased] [added: shares purchased] | | | [added: |] Average [removed: Price Paid] [added: price paid] per [removed: Share] [added: share] | | | | Total [removed: Number] [added: number] of [removed: Shares Purchased] [added: shares purchased] as [removed: Part] [added: part] of [removed: Publicly Announced Plans or Programs] [added: publicly announced plans] | | | [added: |] Maximum [removed: Number] [added: number] of [removed: Shares] [added: shares] that [removed: May Yet Be Purchased Under] [added: may yet be purchased under] the [removed: Plans or Programs] [added: plans] | | [added: |]

The graph assumes that the value of the investment in our common stock and in each of the indexes (including reinvestment of dividends) was $100 on [removed: 12/31/2013] [added: 12/31/2014] and tracks it through [removed: 12/31/2018.][added: 12/31/2019.]

[removed: ][added: ]

| June 17, 2019 | | $ | 0.50 | |

| --- | --- | --- | --- | --- |

| December 16, 2019 | | $ | 0.50 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1-31, 2019 | | | — | | | $ | — | | | | — | | | | 10,294,290 | |

| November 1-30, 2019 | | | — | | | $ | — | | | | — | | | | 10,736,102 | |

| December 1-31, 2019 | | | 1,246,888 | | | $ | 73.89 | | | | 1,246,888 | | | | 9,622,194 | |

| Total | | | 1,246,888 | | | $ | 73.89 | | | | 1,246,888 | | | | 9,622,194 | |

| | | 12/14 | | | | 12/15 | | | | 12/16 | | | | 12/17 | | | | 12/18 | | | | 12/19 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Expeditors International of Washington, Inc. | | $ | 100.00 | | | $ | 102.62 | | | $ | 122.44 | | | $ | 151.71 | | | $ | 161.60 | | | $ | 187.74 | |

| Standard and Poor's 500 Index | | | 100.00 | | | | 101.38 | | | | 113.51 | | | | 138.29 | | | | 132.23 | | | | 173.86 | |

| NASDAQ Industrial Transportation (NQUSB2770T) | | | 100.00 | | | | 77.05 | | | | 99.57 | | | | 127.01 | | | | 115.52 | | | | 145.48 | |

17.

| | | | |

| --- | --- | --- | --- |

| June 15, 2017 | $ | 0.42 | |

| December 15, 2017 | $ | 0.42 | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1-31, 2018 | | — | | | $ | — | | | — | | | 2,843,101 | |

| November 1-30, 2018 | | 176,886 | | | $ | 73.56 | | | 176,886 | | | 12,726,600 | |

| December 1-31, 2018 | | 1,106,021 | | | $ | 71.56 | | | 1,106,021 | | | 11,669,839 | |

| Total | | 1,282,907 | | | $ | 71.82 | | | 1,282,907 | | | 11,669,839 | |

In November 1993, Expeditors' Board of Directors authorized a Non-Discretionary Stock Repurchase Plan for the purpose of repurchasing our common stock in the open market with the proceeds received from the exercise of stock options.

On February 9, 2009, the Plan was amended to increase the authorization to repurchase up to 40 million shares of our common stock.

This authorization has no expiration date.

This plan was disclosed in our annual report on Form 10-K filed on March 31, 1995.

In the fourth quarter of 2018, we repurchased 170,726 shares of common stock under the Non-Discretionary Stock Repurchase Plan.

In the fourth quarter of 2018, we repurchased 1,112,181 shares of common stock under the Discretionary Stock Repurchase Plan.

These discretionary repurchases included 78,382 shares that were made to limit the growth in the number of issued and outstanding shares resulting from stock option exercises and 1,033,799 shares to reduce the number of total shares outstanding.

15.

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 12/13 | | | 12/14 | | | 12/15 | | | 12/16 | | | 12/17 | | | 12/18 | | |

| Expeditors International of Washington, Inc. | | $ | 100.00 | | $ | 100.81 | | $ | 101.92 | | $ | 119.68 | | $ | 146.19 | | $ | 153.88 | |

| Standard and Poor's 500 Index | | 100.00 | | | 111.39 | | | 110.58 | | | 121.13 | | | 144.65 | | | 135.63 | | |

| NASDAQ Industrial Transportation (NQUSB2770T) | | 100.00 | | | 121.41 | | | 93.55 | | | 120.89 | | | 154.19 | | | 140.25 | | |

[removed: In] [added: | in] thousands, except per share data [added: | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |]

| Revenues | | $ | [added: 8,175,426 | | | |] 8,138,365 | | | [removed: 6,920,948] | [added: 6,920,948] | | [removed: 6,098,037] | | [added: 6,098,037] | [removed: 6,616,632] | | | [removed: 6,564,721] [added: 6,616,632] | |

| Net earnings attributable to shareholders | | $ | [added: 590,395 | | | |] 618,199 | | | [removed: 489,345] | [added: 489,345] | | [removed: 430,807] | | [added: 430,807] | [removed: 457,223] | | | [removed: 376,888] [added: 457,223] | |

| Diluted earnings attributable to shareholders per share | | $ | [added: 3.39 | | | |] 3.48 | | | [removed: 2.69] | [added: 2.69] | | [removed: 2.36] | | [added: 2.36] | [removed: 2.40] | | | [removed: 1.92] [added: 2.40] | |

| Basic earnings attributable to shareholders per share | | $ | [added: 3.45 | | | |] 3.55 | | | [removed: 2.73] | [added: 2.73] | | [removed: 2.38] | | [added: 2.38] | [removed: 2.42] | | | [removed: 1.92] [added: 2.42] | |

| Dividends declared and paid per common share | | $ | [added: 1.00 | | | |] 0.90 | | | [removed: 0.84] | [added: 0.84] | | [removed: 0.80] | | [added: 0.80] | [removed: 0.72] | | | [removed: 0.64] [added: 0.72] | |

| Cash used for dividends | | $ | [added: 170,553 | | | |] 156,840 | | | [removed: 150,495] | [added: 150,495] | | [removed: 145,123] | | [added: 145,123] | [removed: 135,673] | | | [removed: 124,634] [added: 135,673] | |

| Cash used for share repurchases | | $ | [added: 389,060 | | | |] 647,898 | | | [removed: 478,258] | [added: 478,258] | | [removed: 337,658] | | [added: 337,658] | [removed: 629,991] | | | [removed: 550,781] [added: 629,991] | |

| Working capital | | $ | [added: 1,601,605 | | | |] 1,407,977 | | | [removed: 1,448,333] | [added: 1,448,333] | | [removed: 1,288,648] | | [added: 1,288,648] | [removed: 1,115,136] | | | [removed: 1,285,188] [added: 1,115,136] | |

| Total assets | | $ | [added: 3,691,884 | | | |] 3,314,559 | | | [removed: 3,117,008] | [added: 3,117,008] | | [removed: 2,790,871] | | [added: 2,790,871] | [removed: 2,565,577] | | | [removed: 2,870,626] [added: 2,565,577] | |

| Shareholders’ equity | | $ | [added: 2,195,028 | | | |] 1,986,838 | | | [removed: 1,991,858] | [added: 1,991,858] | | [removed: 1,844,638] | | [added: 1,844,638] | [removed: 1,691,993] | | | [removed: 1,868,408] [added: 1,691,993] | |

| Weighted average diluted shares outstanding | | [added: | 174,209 | | | |] 177,833 | | | | 181,666 | | | [removed: 182,704] | [removed: |] [added: 182,704] | [removed: 190,223] | | | [removed: 196,768] [added: 190,223] | |

| Weighted average basic shares outstanding | | [added: | 170,899 | | | |] 174,133 | | | | 179,247 | | | [removed: 181,282] | [removed: |] [added: 181,282] | [removed: 188,941] | | | [removed: 196,147] [added: 188,941] | |

This Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2018] [added: 2019] contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Such statements are qualified in their entirety by reference to and are accompanied by the discussion [added: under Risk Factors] in Item 1A of certain important factors that could cause actual results to differ materially from such forward-looking statements.

Furthermore, reference is also made to other sections of this report, [added: including Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 and Quantitative and Qualitative Disclosures About Market Risk in Item 7A,] which include additional factors that could adversely impact Expeditors' business and financial performance.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Operating income | | $ | 766,692 | | | | 796,563 | | | | 700,260 | | | | 670,163 | | | | 721,484 | |

18.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2018 | | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |

| Net revenues1 | | $ | 2,620,373 | | | 2,319,189 | | | 2,164,036 | | | 2,187,777 | | | 1,981,427 | |

_______________________

1Non-GAAP measure calculated as revenues less directly related operating expenses attributable to our principal services.

See Management's Discussion and Analysis for a reconciliation of Net Revenues to Revenues.

17.

| | | | [Reports of Independent Registered Public Accounting [removed: Firm](#s9A8210E912E057D99EA417AB1A59D0D2)] [added: Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC)] | | F-1 and [removed: F-2] [added: F-3] |

| | | | [removed: Balance] [added: [Balance] Sheets as of December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018](#CONSOLIDATED_BALANCE_SHEETS)] | | [removed: F-3] [added: F-4] |

| | | | [Statements of Earnings for the Years Ended December 31, [removed: 201](#s87AC86B956055E2E8C4084FBC7757CC2)8, 2017,] [added: 2019, 2018] and [removed: 2016] [added: 2017](#CONSOLIDATED_STATEMENTS_EARNINGS)] | | [removed: F-4] [added: F-5] |

| | | | [Statements of Comprehensive Income for the Years Ended December 31, [removed: 201](#s12936BC1C1BB5175AC54B323A878E5DD)8, 2017,] [added: 2019, 2018] and [removed: 2016] [added: 2017](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] | | [removed: F-5] [added: F-6] |

| | | | [Statements of Equity for the Years Ended December 31, [removed: 201](#sBDFCEE9E946455FB82D24E4F10525B35)8, 2017,] [added: 2019, 2018] and [removed: 2016] [added: 2017](#CONSOLIDATED_STATEMENTS_EQUITY)] | | [removed: F-6 and] F-7 |

| | | | [Statements of Cash Flows for the Years Ended December 31, [removed: 201](#sBF6B0BC614155E59977E8D487436DC87)8, 2017,] [added: 2019, 2018] and [removed: 2016] [added: 2017](#Consolidated_Statements_of_Cash_Flows)] | | F-8 |

| | | | [Notes to Consolidated Financial [removed: Statements](#sD2D6445BCC2D546BB36A151FE703384C)] [added: Statements](#Notes_to_Consolidated_Financial_Statemen)] | | F-9 through [removed: F-22] [added: F-24] |

30.

| | | | | | |

Management, including the Chief Executive Officer and Chief Financial Officer, conducted an assessment of the effectiveness of the Company's internal control over financial reporting, as of December 31, [removed: 2018,] [added: 2019,] based on the framework in [removed: Internal] [added: *Internal] Control — Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, management has concluded that, as of December 31, [removed: 2018,] [added: 2019,] our internal control over financial reporting was effective.

KPMG LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] which is included on page [removed: F-2.][added: F-3.]

29.

In 2018 we adopted the new revenue recognition accounting standard, and in 2019 we will adopt the new accounting standard for leases.

The adoption of these accounting standards requires further changes to existing processes and systems that are an integral part of our internal controls and require testing for operating effectiveness.

31.

The information required by this item is set forth below or incorporated by reference to information under the caption “Proposal No. 1: Election of Directors” and to the information under the [removed: captions “Section 16(a) Beneficial Ownership Reporting Compliance” and] [added: caption] “Board Operations" in Expeditors' definitive Proxy Statement for its annual meeting of shareholders to be held on May [removed: 7, 2019.][added: 5, 2020.]

See also Part I - Item 1 [removed: -] [added: – Information about our] Executive [removed: Officers of the Registrant.][added: Officers.]

Dubois, Alain Monié, and [removed: Tay Yoshitani.][added: Diane H.]

[removed: McCune, Chairman] [added: Carlile, Director] of the Audit Committee, [removed: is an] [added: are] audit committee financial [removed: expert] [added: experts] as defined by Item 407(d)(5) of Regulation S-K under the Exchange Act and that each member of the Audit Committee is independent under the NASDAQ independence standards applicable to audit committee members.

Expeditors has adopted a [removed: Code] [added: *Code] of Business [removed: Conduct] [added: Conduct*] that applies to all Expeditors employees including, of course, its principal executive officer and principal financial and accounting officer.

The [removed: Code] [added: *Code] of Business [removed: Conduct] [added: Conduct*] is posted with the governance documents on Expeditors' website at [removed: https://investor.expeditors.com.][added: *https://investor.expeditors.com*.]

Expeditors will post any amendments to the [removed: Code] [added: *Code] of Business [removed: Conduct] [added: Conduct*] at that location.

In the unlikely event that the Board of Directors approves any sort of waiver to the [removed: Code] [added: *Code] of Business [removed: Conduct] [added: Conduct*] for Expeditors' executive officers or directors, information concerning such waiver will also be posted at that location.

McCune, Robert P.

Carlile, James M.

Gulyas.

McCune, Chairman of the Audit Committee, and Robert P.

McCune, James M.

30.

The information required by this item is incorporated by reference to information under the captions “Director Compensation Program” and “Compensation Discussion and Analysis” in Expeditors' definitive Proxy Statement for its annual meeting of shareholders to be held on May [removed: 7, 2019.][added: 5, 2020.]

The information required by this item is incorporated by reference to information under the captions “Shareholder Engagement & Stock Ownership Information” in Expeditors' definitive Proxy Statement for its annual meeting of shareholders to be held on May [removed: 7, 2019.][added: 5, 2020.]

The following table provides information as of December 31, [removed: 2018,] [added: 2019,] regarding compensation plans under which equity securities of Expeditors are authorized for issuance.

| Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) | | | [removed: Weighted-Average] [added: | Weighted- Average] Exercise Price of Outstanding Options, Warrants and Rights (2) | | | | Number of Securities Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (3) | | [added: |]

| Equity Compensation Plans [added: Not] Approved by Security Holders | | [removed: 10,228,276] | [added: —] | | [removed: $] | [removed: 44.60] | [added: —] | | [removed: 2,255,752] | | [added: — | |]

| Equity Compensation Plans [removed: Not] Approved by Security Holders | | [removed: —] | [added: 7,871,918] | | [removed: —] | [added: $] | [added: 48.85] | | [removed: —] | | [added: 3,902,445 | |]

| (3) | Includes [removed: 743,015] [added: 3,158,034] available for issuance under the employee stock purchase [removed: plans, 1,431,417] [added: plans and 744,411] available for future grants of equity awards under the Omnibus Incentive Plan [removed: and 81,320 available for issuance of restricted stock under the Director's Restricted Stock Plan.] |

| | | (a) | | | | (b) | | | | (c) | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total | | | 7,871,918 | | | $ | 48.85 | | | | 3,902,445 | |

32.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | (a) | | | (b) | | | | (c) | |

| Total | | 10,228,276 | | | $ | 44.60 | | | 2,255,752 | |

| | |

The information required by this item is incorporated by reference to information under the captions “Certain Relationships and Related Transactions” in Expeditors' definitive Proxy Statement for its annual meeting of shareholders to be held on May [removed: 7, 2019.][added: 5, 2020.]

The information required by this item is incorporated by reference to information under the caption “Relationship with Independent Registered Public Accounting Firm” in Expeditors' definitive Proxy Statement for its annual meeting of shareholders to be held on May [removed: 7, 2019.][added: 5, 2020.]

31.

| | | [Reports of Independent Registered Public Accounting [removed: Firm](#s9A8210E912E057D99EA417AB1A59D0D2)] [added: Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC)] | | F-1 [removed: and F-2] [added: through F-3] |

| | | [Consolidated Balance Sheets as of December 31, [removed: 201](#sF5655DA6FE4E535EBE2FCF1F55D9698A)8] [added: 2019] and [removed: 2017] [added: 2018](#CONSOLIDATED_BALANCE_SHEETS)] | | [removed: F-3] [added: F-4] |

| | | [Consolidated Statements of Earnings for the Years Ended December 31, [removed: 201](#s87AC86B956055E2E8C4084FBC7757CC2)8, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017](#CONSOLIDATED_STATEMENTS_EARNINGS)] | | [removed: F-4] [added: F-5] |

| | | [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 201](#s12936BC1C1BB5175AC54B323A878E5DD)8, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] | | [removed: F-5] [added: F-6] |

| | | [Consolidated Statements of Equity for the Years Ended December 31, [removed: 201](#sBDFCEE9E946455FB82D24E4F10525B35)8, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017](#CONSOLIDATED_STATEMENTS_EQUITY)] | | [removed: F-6 and] F-7 |

| | | [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 201](#sBF6B0BC614155E59977E8D487436DC87)8, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017](#Consolidated_Statements_of_Cash_Flows)] | | F-8 |

| | | [Notes to Consolidated Financial [removed: Statements](#sD2D6445BCC2D546BB36A151FE703384C)] [added: Statements](#Notes_to_Consolidated_Financial_Statemen)] | | F-9 through [removed: F-22] [added: F-24] |

| [added: |] (1) | Form of Employment Agreement executed by Jeffrey S. Musser, Expeditors' President and Chief Executive Officer. See Exhibit 10.23. |

| [added: |] (2) | Form of Employment Agreement executed by Expeditors' Chief Financial Officer. See Exhibit 10.25. |

| [added: |] (3) | Form of Employment Agreement executed by Expeditors' President, Global Products. See Exhibit 10.27. |

| [added: |] (4) | Expeditors' 2008 Executive Incentive Compensation Plan. See Exhibit 10.35. |

| [added: |] (5) | Expeditors' 2014 Directors’ Restricted Stock Plan. See Exhibit 10.36. |

| [added: |] (6) | Expeditors' 2002 [added: Amended and Restated] Employee Stock Purchase Plan. See Exhibit 10.42. |

| [removed: (8)] | [added: (7) |] Expeditors' [removed: 2008] [added: 2009] Stock Option Plan. See Exhibit [removed: 10.51.] [added: 10.53.] |

| [removed: (9)] | [added: (8) |] Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2008] [added: 2009] Stock Option Plan. See Exhibit [removed: 10.52.] [added: 10.54.] |

| [removed: (10)] | [added: (9) |] Expeditors' [removed: 2009] [added: 2010] Stock Option Plan. See Exhibit [removed: 10.53.] [added: 10.55.] |

| [removed: (11)] | [added: (10) |] Form of Stock Option Agreement used in connection with options granted under [removed: Expeditors' 2009] [added: Expeditors’ 2010] Stock Option Plan. See Exhibit [removed: 10.54.] [added: 10.56.] |

| [removed: (12)] | [added: (11) |] Expeditors' [removed: 2010] [added: 2011] Stock Option Plan. See Exhibit [removed: 10.55.] [added: 10.57.] |

| [removed: (13)] | [added: (12) |] Form of Stock Option Agreement used in connection with options granted under [removed: Expeditors’ 2010] [added: Expeditors' 2011] Stock Option Plan. See Exhibit [removed: 10.56.] [added: 10.58.] |

| [removed: (14)] | [added: (13) |] Expeditors' [removed: 2011] [added: 2012] Stock Option Plan. See Exhibit [removed: 10.57.] [added: 10.59.] |

| [removed: (15)] | [added: (14) |] Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2011] [added: 2012] Stock Option Plan. See Exhibit [removed: 10.58.] [added: 10.60.] |

| [removed: (16)] | [added: (15) |] Expeditors' [removed: 2012] [added: 2013] Stock Option Plan. See Exhibit [removed: 10.59.] [added: 10.61.] |

| [removed: (17)] | [added: (16) |] Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2012] [added: 2013] Stock Option Plan. See Exhibit [removed: 10.60.] [added: 10.62.] |

| [removed: (18)] | [added: (17) |] Expeditors' [removed: 2013] [added: 2014] Stock Option Plan. See Exhibit [removed: 10.61.] [added: 10.63.] |

| [removed: (19)] | [added: (18) |] Form of Stock Option Agreement used in connection with options granted under [removed: Expeditors' 2013] [added: Expeditors; 2014] Stock Option Plan. See Exhibit [removed: 10.62.] [added: 10.64.] |

| [removed: (20)] | [added: (19) |] Expeditors' [removed: 2014] [added: 2015] Stock Option Plan. See Exhibit [removed: 10.63.] [added: 10.65.] |

| [removed: (21)] | [added: (20) |] Form of Stock Option Agreement used in connection with options granted under [removed: Expeditors; 2014] [added: Expeditors' 2015] Stock Option Plan. See Exhibit [removed: 10.64.] [added: 10.66.] |

| [removed: (22)] | [added: (21) |] Expeditors' [removed: 2015] [added: 2016] Stock Option Plan. See Exhibit [removed: 10.65.] [added: 10.67.] |

| [removed: (23)] | [added: (22) |] Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2015] [added: 2016] Stock Option Plan. See Exhibit [removed: 10.66.] [added: 10.68.] |

| [added: |] (25) | Form of [removed: Stock Option] [added: Performance Share Award] Agreement used in connection with [removed: options] [added: performance share units] granted under Expeditors' [removed: 2016] [added: 2017 Omnibus Incentive] Stock [removed: Option] Plan. See Exhibit [removed: 10.68.] [added: 10.71] |

| [removed: (26)] | [added: (23) |] Expeditors' 2017 Omnibus Incentive Plan. See Exhibit 10.69 |

| [removed: (27)] | [added: (24) |] Form of Executive Restricted Stock Unit Award Agreement used in connection with executive restricted stock units granted under Expeditors' 2017 Omnibus Incentive Stock Plan. See Exhibit 10.70 |

| [removed: (28)] | [added: (26) |] Form of Performance Share Award Agreement used in connection with performance share units granted under Expeditors' 2017 Omnibus Incentive Stock Plan. See Exhibit [removed: 10.71] [added: 10.72] |

[removed: (b)EXHIBITS][added: | (b) | EXHIBITS |]

| [10.42](http://www.sec.gov/Archives/edgar/data/746515/000074651514000006/a2014def14a.htm) | | Expeditors' [added: Amended and Restated] 2002 Employee Stock Purchase Plan. (Incorporated by reference to Appendix [removed: C] [added: A] of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March [removed: 21, 2014.)] [added: 27, 2019.)] |

| [removed: [10.52](http://www.sec.gov/Archives/edgar/data/746515/000119312509040947/dex1052.htm)] [added: [10.72](http://www.sec.gov/Archives/edgar/data/746515/000156459019029862/expd-ex1072_182.htm)] | | Form of [removed: Stock Option] [added: Performance Share Award] Agreement used in connection with [removed: options] [added: performance share units] granted under Expeditors' [removed: 2008 Stock Option] [added: 2017 Omnibus Incentive] Plan. (Incorporated by reference to Exhibit [removed: 10.52] [added: 10.72] to Form [removed: 10-K] [added: 10-Q] filed on or about [removed: February 27, 2009.)] [added: August 7, 2019.)] |

| [removed: [21.1](https://www.sec.gov/Archives/edgar/data/746515/000074651519000004/a201810-kex211.htm)] [added: [21.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex211_10.htm)] | | Subsidiaries of the registrant. |

| [removed: [23.1](https://www.sec.gov/Archives/edgar/data/746515/000074651519000004/a201810-kex231.htm)] [added: [23.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex231_8.htm)] | | Consent of Independent Registered Public Accounting Firm. |

| [removed: [31.1](https://www.sec.gov/Archives/edgar/data/746515/000074651519000004/a201810-kex311.htm)] [added: [31.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex311_9.htm)] | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |

| [removed: [31.2](https://www.sec.gov/Archives/edgar/data/746515/000074651519000004/a201810-kex312.htm)] [added: [31.2](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex312_6.htm)] | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |

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| [4.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex41_1166.htm) | | Description of Registrant’s Securities. |

34.

| --- | --- | --- |

| 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. |

| 104 | | The cover page from the Company’s Yearly Report on Form 10-K for the year ended December 31, 2019, has been formatted in Inline XBRL |

| | | | | |

| | |

| --- | --- |

| (7) | Expeditors' amendment to the 2002 Employee Stock Purchase Plan. See Exhibit 10.42.1 |

| (24) | Expeditors' 2016 Stock Option Plan. See Exhibit 10.67. |

32.

| | | |

| [10.42.1](http://www.sec.gov/Archives/edgar/data/746515/000074651514000006/a2014def14a.htm) | | Expeditors' amendment to the 2002 Employee Stock Purchase Plan. (Incorporated by reference to Appendix C of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 21, 2014.) |

| [10.51](http://www.sec.gov/Archives/edgar/data/746515/000104746908003213/a2183955zdef14a.htm) | | Expeditors' 2008 Stock Option Plan. (Incorporated by reference to Appendix A of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 21, 2008.) |

| 101.INS | | XBRL Instance Document. |

Date: February [removed: 22, 2019][added: 21, 2020]

| [added: |] EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. | | |

| | By: | [added: |] /s/ Bradley S. Powell |

| | | [added: |] Bradley S. Powell |

| | | [added: |] Senior Vice President and Chief Financial Officer |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February [removed: 22, 2019.][added: 21, 2020.]

| Signature | | Title | [removed: |]

| /s/ Jeffrey S. Musser | | President, Chief Executive Officer and Director | [removed: |]

| (Jeffrey S. Musser) | | (Principal Executive Officer) | [removed: |]

| /s/ Bradley S. Powell | | Senior Vice President and Chief Financial Officer | [removed: |]

| (Bradley S. Powell) | | (Principal Financial and Accounting Officer) | [removed: |]

| /s/ Robert R. Wright | | Chairman of the Board and Director | [removed: |]

| (Robert R. Wright) | | | [removed: |]

| /s/ Glenn M. Alger | | Director | [removed: |]

| (Glenn M. Alger) | | | [removed: |]

| /s/ James M. DuBois | | Director | [removed: |]

| (James M. DuBois) | | | [removed: |]

| /s/ Mark A. Emmert | | Director | [removed: |]

| (Mark A. Emmert) | | | [removed: |]

| /s/ Diane H. Gulyas | | Director | [removed: |]

| (Diane H. Gulyas) | | | [removed: |]

| /s/ Richard B. McCune | | Director | [removed: |]

| (Richard B. McCune) | | | [removed: |]

| /s/ Alain Monié | | Director | [removed: |]

| (Alain Monié) | | | [removed: |]

| /s/ Liane J. Pelletier | | Director | [removed: |]

| (Liane J. Pelletier) | | | [removed: |]

YEARS ENDED DECEMBER 31, [added: 2019,] 2018, [removed: 2017,] AND [removed: 2016][added: 2017]

To the [removed: Stockholders] [added: Shareholders] and Board of Directors

We have audited the accompanying consolidated balance sheets of Expeditors International of Washington, Inc. and subsidiaries (the Company) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the years in the three‑year period ended December 31, [removed: 2018,] [added: 2019,] and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, [removed: 2018,] [added: 2019,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February [removed: 22, 2019] [added: 21, 2020] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

| /s/ KPMG LLP | [removed: | |]

| We have served as the Company's auditor since 1982. | [removed: | |]

| Seattle, Washington | [removed: | |]

| [removed: February 22,] [added: | | |] 2019 | | |

We have audited Expeditors International of Washington, Inc.’s and [removed: subsidiaries'] [added: subsidiaries’] (the Company) internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2018,] [added: 2019,] and the related notes (collectively, the consolidated financial statements), and our report dated February [removed: 22, 2019] [added: 21, 2020] expressed an unqualified opinion on those consolidated financial statements.

| December 31, | [removed: 2018] | [added: 2019] | | | [removed: 2017] | [added: 2018] | [added: | |]

| /s/ Robert P. Carlile | | Director |

| (Robert P. Carlile) | | |

As discussed in Notes 1M and 4 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Financial Accounting Standards Board’s Accounting Standards Codification Topic 842.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of gross unrecognized tax benefits

We identified the assessment of gross unrecognized tax benefits as a critical audit matter.

Complex auditor judgment was required in evaluating the Company’s interpretation of tax law and its estimate of the ultimate resolution of tax positions.

F-1.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s unrecognized tax benefit process.

This included controls related to the interpretation of tax law and its application in the liability estimation process.

Since tax law is complex and often subject to interpretations, we involved tax professionals with specialized skills and knowledge, who assisted in:

| | • | evaluating the Company’s interpretation of tax laws, |

| | • | assessing transfer pricing positions for compliance with applicable laws and regulations, |

| | • | inspecting settlement documents with applicable taxing authorities and appeals documents with applicable tax courts, |

| | • | assessing the expiration of statutes of limitations, |

| --- | --- | --- |

| | • | comparing historical gross unrecognized tax benefits to actual results upon conclusion of tax audits or expiration of the statute of limitations, and |

| --- | --- | --- |

| | • | performing an independent assessment of the Company’s tax positions and comparing the results to the Company’s assessment. |

| --- | --- | --- |

In addition, we assessed the responses received directly from the Company’s external legal counsel regarding tax positions for which they had been engaged.

| --- |

| |

| |

| February 21, 2020 |

F-2.

To the Shareholders and Board of Directors

| /s/ KPMG LLP |

| --- |

| Seattle, Washington |

| February 21, 2020 |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Assets: | | | | | | | | |

| Cash and cash equivalents | | $ | 1,230,491 | | | $ | 923,735 | |

| Accounts receivable, net | | | 1,315,091 | | | | 1,581,530 | |

| Operating lease right-of-use assets | | | 390,035 | | | | — | |

| Liabilities: | | | | | | | | |

34.

| | | | |

| /s/ Tay Yoshitani | | Director | |

| (Tay Yoshitani) | | | |

F-1

F-2

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Noncurrent Federal income tax payable | — | | | | 29,516 | |

| issued and outstanding 171,582 shares at December 31, 2018 | | | | | | |

| and 176,374 shares at December 31, 2017 | 1,716 | | | | 1,764 | |

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | Shares | | | Par Value | | |

| Balance at December 31, 2015 | 182,067 | | | $ | 1,821 | |

| Tax benefits from stock plans, net | — | | | — | | |

| Net earnings | — | | | — | | |

| Dividends paid ($0.80 per share) | — | | | — | | |

| Balance at December 31, 2016 | 179,857 | | | 1,799 | | |

| Dividends paid ($0.90 per share) | — | | | — | | |

| Balance at December 31, 2018 | 171,582 | | | $ | 1,716 | |

| | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at December 31, 2015 | $ | 31 | | | 1,771,379 | | | (81,238 | ) | | 1,691,993 | | | 2,683 | | | 1,694,676 | |

| Exercise of stock options and release of restricted shares | 157,139 | | | | — | | | — | | | 157,177 | | | — | | | 157,177 | |

| Issuance of shares under stock purchase plan | 28,129 | | | | — | | | — | | | 28,136 | | | — | | | 28,136 | |

| Shares repurchased under provisions of stock repurchase plans | (225,317 | | ) | | (112,274 | ) | | — | | | (337,658 | ) | | — | | | (337,658 | ) |

| Tax benefits from stock plans, net | (2,664 | | ) | | — | | | — | | | (2,664 | ) | | — | | | (2,664 | ) |

| Net earnings | — | | | | 430,807 | | | — | | | 430,807 | | | 1,726 | | | 432,533 | |

| Other comprehensive loss | — | | | | — | | | (23,354 | ) | | (23,354 | ) | | (389 | ) | | (23,743 | ) |

| Dividends paid ($0.80 per share) | — | | | | (145,123 | ) | | — | | | (145,123 | ) | | — | | | (145,123 | ) |

| Purchase of noncontrolling interest | 107 | | | | — | | | — | | | 107 | | | (110 | ) | | (3 | ) |

| Exercise of stock options and release of restricted shares | 176,285 | | | | — | | | — | | | 176,325 | | | — | | | 176,325 | |

| Issuance of shares under stock purchase plan | 28,760 | | | | — | | | — | | | 28,767 | | | — | | | 28,767 | |

| Shares repurchased under provisions of stock repurchase plans | (258,049 | | ) | | (220,127 | ) | | — | | | (478,258 | ) | | — | | | (478,258 | ) |

| Other comprehensive income (loss) | — | | | | — | | | 30,628 | | | 30,628 | | | (194 | ) | | 30,434 | |

| Dividends paid ($0.84 per share) | — | | | | (150,495 | ) | | — | | | (150,495 | ) | | — | | | (150,495 | ) |

| Balance at December 31, 2017 | 546 | | | | 2,063,512 | | | (73,964 | ) | | 1,991,858 | | | 2,515 | | | 1,994,373 | |

| Exercise of stock options and release of restricted shares | 146,157 | | | | — | | | — | | | 146,193 | | | — | | | 146,193 | |

| Issuance of shares under stock purchase plan | 33,285 | | | | — | | | — | | | 33,291 | | | — | | | 33,291 | |