Expeditors International of Washington (EXPD) 10-K risk factor changes: FY2020 vs FY2019

[removed: | International Trade | | 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. [removed: For example, international trade is influenced by: |]

| | [removed: |] • [added: |] currency exchange rates and currency control regulations; |

| | [removed: |] • [added: |] interest rate fluctuations; |

| | [removed: |] • [added: |] changes and uncertainties in governmental policies and inter-governmental disputes, which could result in increased tariff rates, quota restrictions, trade barriers and other types of restrictions; |

| | [removed: |] • [added: |] changes in and application of international and domestic customs, trade and security regulations; |

| | [removed: |] • [added: |] wars, strikes, civil unrest, acts of terrorism, and other conflicts; |

| | [removed: |] • [added: |] changes in labor and other costs; |

| | [removed: |] • [added: |] changes in consumer attitudes regarding goods made in countries other than their own; |

| | [removed: |] • [added: |] changes in availability of credit; [added: and] |

| | [removed: |] • [added: |] changes in the price and readily available quantities of oil and other petroleum-related [removed: products; and] [added: products.] |

| | [removed: |] • [added: |] increased global concerns regarding working conditions and environmental [removed: sustainability.] [added: sustainability;] |

[removed: | Network Continuity and Cybersecurity | | As Expeditors, our customers and suppliers continue to increase reliance on systems, and as additional features are added, the risks also increase.] Any significant disruptions to our global systems or the Internet for any reason, which could include equipment or network failures; co-location facility failures; power outages; sabotage; employee error or other actions; cyber-attacks or other security breaches; reliance on third party technology; geo-political activity or natural disasters; all of which could have a material negative effect on our results. [removed: This could include loss of revenue; business disruptions (such as the inability to timely process shipments); loss of property, including trade secrets and confidential information; legal claims and proceedings; reporting delays or errors; interference with regulatory reporting; significant remediation costs; an increase in costs to protect our systems and technology; or damage to our reputation. |]

[removed: | Foreign Operations | | The majority of Expeditors' revenues and operating income comes from operations conducted outside the United States. To maintain a global service network, we may be required to operate in hostile locations and in dangerous situations. Doing business in foreign locations also subjects us to a variety of risks and considerations not normally encountered by domestic enterprises.] In addition, we operate in parts of the world where common business practices could constitute violations of the anti-corruption laws, rules, regulations and decrees of the United States and of other countries in which we conduct business, including the U.S. Foreign Corrupt Practices Act and the UK Bribery Act; as well as trade and exchange control laws, or laws, regulations and Executive Orders imposing embargoes and sanctions; and anti-boycott laws and regulations. [removed: Compliance with these laws, rules, regulations and decrees is dependent on our employees, service providers, agents, third party brokers and customers, whose individual actions could violate these laws, rules, regulations and decrees. Failure to comply could result in substantial penalties and additional expenses, damage to our reputation and restrictions on our ability to conduct business. |]

[removed: | 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. [removed: |]

[removed: | 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, mass population dislocations, pandemic or other catastrophic event could cause delays in providing services or performing other mission-critical functions. [removed: 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. |]

In addition to the other information set forth in this report, you should carefully consider the following factors, which could materially affect our business, financial condition or results of operations in future periods.

The risks described below are not the only risks facing our Company.

Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods.

COVID-19 Risks

COVID-19 significantly impacted worldwide economic conditions and global trade and may continue to have a disruptive effect on our operations, and the operations of our service providers and our customers, which may further impact our business.

COVID-19 was declared as a global health emergency and later declared as a global pandemic by the World Health Organization.

As a result, throughout 2020 governments have implemented travel restrictions, mandated lockdowns and other precautionary measures that resulted in significant business and supply chain disruptions and a slowdown in international trade.

This crisis has affected, and is expected to continue affecting, our business in many aspects.

Governments have designated our operations as essential business and we activated our business continuity plan to be able to conduct operations.

Our facilities and employees are operating under the constraints of special protective measures and many are working remotely.

These disruptions are also threatening the financial stability of our service providers and the ability to efficiently and profitably route our customers’ freight.

Reduced flight schedules and cancellations have significantly reduced available space for airfreight, while ocean carriers have continued to manage their operating capacity.

Certain freight lanes have presented severe shortages of capacity compared to demand at various times over the year while ocean ports congestion in the second half of the year also hampered the routing of freight.

These freight market conditions have created and continue to create pricing volatility that challenges Expeditors’ ability to maintain historical unitary profitability.

Many of our customers are experiencing disruptions in their revenue and cash flow, prompting these customers to renegotiate contractual terms and increasing our accounts receivable collection risks.

Such conditions could result in the loss of business and additional bad debt allowances in the future if our customers’ ability to pay deteriorates.

Although we are monitoring the situation, we cannot predict for how long, or the ultimate extent to which the pandemic and related precautionary measures may disrupt our operations.

Any significant disruption resulting from this on a large scale or over an extended period of time would negatively affect our business and our financial results.

The COVID-19 pandemic could also have the effect of heightening many of the other risks described below.

We rely on service providers, such as air, ocean and ground freight carriers, and if they become financially unstable or have reduced capacity to provide service because of COVID-19, 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.

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.

Prior to 2020, ocean carriers have incurred significant operating losses are still highly leveraged with debt.

Additionally, several ocean carriers have consolidated, with the potential for more to occur in the future.

The global economic recession has impacted trade and could affect demand for our services or the financial stability of our service providers and customers.

The global economy has entered a recession as a result of the pandemic, which has affected trade and could affect demand for our services.

Continued unfavorable economic conditions could result in lower freight volumes and adversely affect 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.

Industry Risks

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.

For example, international trade is influenced by:

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| RISK FACTORS | | DISCUSSION AND POTENTIAL SIGNIFICANCE |

| | | |

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

| 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 capacity or availability, pricing volatility or more limited carrier transportation schedules, such as those caused by the Novel Coronavirus, could negatively impact our ability to 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 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. |

13.

| 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 hinder our ability to execute on our business strategies and level of service. The loss of the services of one or more key personnel could have an adverse effect on our business. 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 entity, are among the unique characteristics responsible for differentiating our performance from that of many of our competitors. Significant changes to compensation programs could affect our performance and ability to attract and retain key personnel. |

| Technology | | Expeditors relies heavily and must compete based upon the flexibility and sophistication of the technologies utilized in performing our core businesses. Future results depend on our success in developing competitive and reliable systems to address the needs of our customers and suppliers. Development and maintenance of these systems must be accomplished in a cost-effective manner and support the use of secure protocols, including integration and availability of third party technology. We are continually enhancing our systems, including significant upgrades to core operating and accounting systems. These efforts are inherently complex and if not managed properly could lead to disruptions in our operations or our ability to remain competitive. |

| Growth | | Expeditors has historically relied primarily upon organic growth and has tended to avoid growth through acquisition. Future results will depend upon our ability to anticipate and adapt to constantly evolving supply chain requirements and innovations. To continue to grow organically, we must gain profitable market share in a highly competitive environment and successfully develop and market new service offerings. When investment opportunities arise, our success could be dependent on our ability to evaluate and integrate acquisitions. |

| 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 handling dangerous and hazardous materials, trade compliance, data privacy, 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. |

14.

| Competition | | 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 could result in 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. |

| Taxes | | Expeditors is subject to taxation in the United States (Federal, state and local) as well as many foreign 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. 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, 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. |

| 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 2009, 2012 and 2019. These conditions may adversely affect certain of our customers and service providers. Were that to occur, our revenues and net earnings could 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 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 experienced. |

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 [removed: logistics] [added: supply chain] solutions.

The following chart shows revenues by geographic areas of responsibility for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017:][added: 2018:]

[removed: ][added: ]

In accordance with our revenue recognition policy (see Note [removed: 1.E] [added: 1.F] to the consolidated financial statements in this report), almost all freight revenues and related expenses are recorded at origin and shipment profits are split between origin and destination offices by recording a commission fee or profit share [added: of] revenue at the destination.

North Asia is our largest export oriented region and accounted for [removed: 31%] [added: 38%] of revenues, [removed: 36%] [added: 44%] of directly related cost of transportation and other expenses and [removed: 33%] [added: 37%] of operating income for the year ended December 31, [removed: 2019.][added: 2020.]

The People’s Republic of China, including Hong Kong, represented more than [removed: 85%] [added: 84%] of North Asia revenues, [removed: 86%] [added: 85%] of directly related cost of transportation and other expenses and [removed: 81%] [added: 79%] operating income for the year ended December 31, [removed: 2019.][added: 2020.]

We believe that our unique [removed: culture] [added: culture, at the center of which are our employees,] is a critical component to our continued success.

Our business growth strategy emphasizes a focus on the right markets and, within each market, on the right customers that lead to profitable business [removed: growth.][added: growth through the aggressive marketing of our service offerings.]

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 promulgate new regulations [added: in reaction to the pandemic] and increase oversight and enforcement of new and existing laws.

[removed: Many carriers] [added: Carriers] are highly leveraged with debt and [removed: certain carriers] [added: many] are [removed: facing significant liquidity challenges.][added: incurring, or have recently incurred, operating losses.]

Currently, the United States and China have significantly increased tariffs on certain imports and are engaged in trade [removed: negotiations.][added: negotiations and changes to export regulations and tariffs.]

[removed: The] [added: In 2020, the] United Kingdom and the European Union [removed: are negotiating] [added: negotiated] the terms of the United Kingdom's exit from the European [removed: Union.][added: Union (EU), which were effective on January 1, 2021.]

We cannot predict the outcome of [removed: these proposals or negotiations,] [added: changes in tariffs,] or [added: interpretations, and trade restrictions and accords and] the effects they will have on our business.

Our pricing and terms continue to be pressured by uncertainty in global trade and economic conditions, concerns over [removed: volatile fuel costs, disruptions in port services, political unrest] [added: availability of airfreight] and [removed: fluctuating currency exchange rates.][added: ocean freight]

[removed: Ocean] [added: Prior to 2020, many ocean] carriers [removed: have] incurred substantial operating losses [removed: in recent years,] and [removed: many] are highly leveraged with debt.

These [removed: financial challenges] [added: conditions] have resulted in multiple carrier acquisitions and carrier alliance formations.

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

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

The global economic and trade environments remain [removed: uncertain.][added: uncertain, including the ongoing impacts of the pandemic.]

In response to governments implementing higher tariffs on imports, [added: as well as responses to the pandemic’s disruptions,] some customers have begun shifting manufacturing to other countries which could negatively impact us.

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

The total amount of our tax contingencies may increase in [removed: 2020.][added: 2021.]

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

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

This section of this Form 10-K generally discusses [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] items and year-to-year comparisons between [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

Discussions of [removed: 2017] [added: 2018] items and year-to-year comparisons between [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] 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, [removed: 2018.][added: 2019.]

The following table shows the revenues, the directly related cost of transportation and other expenses for our principal services and our overhead expenses for [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

| In thousands | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2019] [added: 2020] vs. [removed: 2018] [added: 2019] |

| Revenues | | $ | [removed: 2,929,882] [added: 4,784,402] | | | $ | [removed: 3,271,932] [added: 2,929,882] | | | $ | [removed: 2,877,032] [added: 3,271,932] | | | [removed: (10)%] [added: 63%] |

| Expenses | | | [removed: 2,143,999] [added: 3,679,185] | | | | [removed: 2,410,793] [added: 2,143,999] | | | | [removed: 2,126,761] [added: 2,410,793] | | | [removed: (11)] [added: 72%] |

| Revenues | | | [removed: 2,217,554] [added: 2,353,247] | | | | [removed: 2,251,754] [added: 2,217,554] | | | | [removed: 2,107,045] [added: 2,251,754] | | | [removed: (2)] [added: 6%] |

| Expenses | | | [removed: 1,613,646] [added: 1,762,754] | | | | [removed: 1,664,168] [added: 1,613,646] | | | | [removed: 1,543,740] [added: 1,664,168] | | | [removed: (3)] [added: 9%] |

| Revenues | | | [removed: 3,027,990] [added: 2,978,832] | | | | [removed: 2,614,679] [added: 3,027,990] | | | | [removed: 1,936,871] [added: 2,614,679] | | | [removed: 16] [added: (2)%] |

| Expenses | | | [removed: 1,781,313] [added: 1,746,851] | | | | [removed: 1,443,031] [added: 1,781,313] | | | | [removed: 931,258] [added: 1,443,031] | | | [removed: 23] [added: (2)%] |

| Salaries and related costs | | | [removed: 1,422,315] [added: 1,538,104] | | | | [removed: 1,393,259] [added: 1,422,315] | | | | [removed: 1,267,120] [added: 1,393,259] | | | [removed: 2] [added: 8%] |

| Other | | | [removed: 447,461] [added: 449,150] | | | | [removed: 430,551] [added: 447,461] | | | | [removed: 351,809] [added: 430,551] | | | [removed: 4] [added: —%] |

| Total overhead expenses | | | [removed: 1,869,776] [added: 1,987,254] | | | | [removed: 1,823,810] [added: 1,869,776] | | | | [removed: 1,618,929] [added: 1,823,810] | | | [removed: 3] [added: 6%] |

| Operating income | | | [removed: 766,692] [added: 940,437] | | | | [removed: 796,563] [added: 766,692] | | | | [removed: 700,260] [added: 796,563] | | | [removed: (4)] [added: 23%] |

| Other income, net | | | [removed: 29,102] [added: 16,127] | | | | [removed: 21,766] [added: 29,102] | | | | [removed: 18,335] [added: 21,766] | | | [removed: 34] [added: (45)%] |

| Earnings before income taxes | | | [removed: 795,794] [added: 956,564] | | | | [removed: 818,329] [added: 795,794] | | | | [removed: 718,595] [added: 818,329] | | | [removed: (3)] [added: 20%] |

The COVID-19 pandemic has significantly affected our business operations for the year ended December 31, 2020, and we expect these disruptive conditions to continue into 2021.

The significant impacts are discussed under Item 1 Business section and below within Results of operations.

Global consistency and compliance is fundamental to preserving our culture and network of people, processes, technology and locations

Innovative solutions, integrated platforms and data quality are vital to achieving a competitive advantage.

As a result, carriers are facing significant liquidity challenges exacerbated by the pandemic and are seeking relief under various government support programs.

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.

The global economy entered into a recession as a result of the pandemic and related precautionary measures including government lockdowns, shutdown of manufacturing and operations for non-essential businesses and travel restrictions.

These rules and regulations are in the process of being implemented and are subject to further interpretation and change.

The full impact of the United Kingdom’s departure, and impact to international trade is still uncertain.

capacity, volatile carrier pricing, disruptions in port services, political unrest and fluctuating currency exchange rates.

Air carriers are experiencing significant cash flow challenges as a result of travel restrictions resulting in cancellation of flights and have incurred record operating losses in 2020.

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.

consistently applied.

In the second quarter and continuing through the remainder of 2020, 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.

Demand grew in the fourth quarter and a concentration of flights to key gateway hubs caused congestion at airports that put further constraints on available capacity.

These conditions have caused extreme imbalances between carrier capacity and demand, principally on exports out of North Asia.

In order to execute and meet the transportation needs of our customers we heavily utilized charter flights and purchased capacity in advance and on the spot market, which resulted in historically high average buy and sell rates.

Airfreight services revenues increased 63% in 2020, as compared with 2019, primarily due to a 78% increase in average sell rates partially offset by a 3% decrease in tonnage.

Sell rates increased to unprecedented levels in all regions with the largest impacts in North Asia and South Asia.

Tonnage through most of the year was affected by the decline in international trade as a result of the pandemic.

Tonnage declined in all regions except North Asia.

North Asia airfreight services revenue represented 24% and 14% of the total Company consolidated revenues for 2020 and 2019, respectively.

Airfreight services expenses increased 72% in 2020, as compared with 2019, primarily due to an 81% increase in average buy rates partially offset by a 3% decrease in tonnage.

Buy rates increased in all regions with the largest impacts in North Asia and South Asia.

During the fourth quarter of 2020, we experienced record high tonnage and continued high average sell rates and buy rates.

When compared to the third quarter of 2020, demand for airfreight grew while capacity shortages persisted in particular on exports from North Asia.

Airfreight services revenues and expenses increased 41% and 47%, respectively, from the third quarter of 2020 to the fourth quarter of 2020, principally

30.

due to 20% and 24% increase in average sell rates and buy rates and a 20% increase in tonnage.

Compared the fourth quarter 2019, airfreight services revenues and expenses increased 104% and 116%, respectively, principally due to 99% and 104% increase in average sell rates and buy rates and a 10% increase in tonnage.

Airfreight services revenues and expenses represented 49% and 52% of our total revenues and expenses, respectively, in the fourth quarter of 2020.

The annual decrease in airfreight tonnage was primarily due to the global pandemic.

As a result of the pandemic, governments around the world implemented travel restrictions and suspended non-essential services.

This caused supply chain disruptions for our domestic and international customers, which correspondingly decreased our airfreight volumes.

In 2020, South Asia, North America and Europe had decreases in tonnage of 22%, 5% and 8%, respectively, when compared to 2019.

North Asia had an increase in tonnage of 13% in 2020, as compared with 2019.

These conditions create a high degree of volatility in volumes, buy rates and sell rates and are expected to continue into 2021 as international passenger flights are not expected to return to pre-pandemic levels and additional capacity from freighters is limited.

19.

20.

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:

| | • | Total dedication to providing superior customer service; |

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

| | • | Compliance with our policies and procedures and government regulations; |

| | • | Aggressive marketing of all of our service offerings; |

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

| | • | Ongoing development of key employees and management personnel; |

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

| | • | 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 |

| | • | 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 effective. |

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.

Although airline profitability has improved, many carriers remain highly leveraged with debt.

Moreover, the ocean carrier industry has incurred substantial losses in recent years.

21.

Additionally, carriers continue to take delivery of new and larger ships, which may increase capacity.

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.

22.

Accordingly, prior to the implementation of the requirements of U.S. tax reform under the Tax Cuts and Jobs Act (2017 Tax Act) in December of 2017, U.S. Federal and State income taxes were provided for all undistributed earnings net of related foreign tax credits.

23.

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 revenues decreased 16%, 15% and 13%, respectively, in 2019.

Airfreight services expenses decreased 11% in 2019, respectively, as compared with the same periods for 2018 principally as a result of a 9% decrease in buy rates and a 6% decrease in tonnage due to available carrier capacity relative to market demand.

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.

The latter part of 2018 benefited from customers accelerating shipments in order to avoid higher tariffs.

All other things being equal, an average 10% weakening of the U.S. dollar, throughout the year ended December 31, [removed: 2019,] [added: 2020,] would have had the effect of raising operating income by approximately [removed: $51] [added: $69] million.

An average 10% strengthening of the U.S. dollar, for the same period, would have the effect of reducing operating income by approximately [removed: $41] [added: $56] million.

Any such hedging activity throughout the year ended December 31, [removed: 2019,] [added: 2020,] was insignificant.

Net foreign currency losses were approximately [removed: $9] [added: $25] million, [removed: $2] [added: $9] million and [removed: $13] [added: $2] million in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively.

We had no foreign currency derivatives outstanding at December 31, [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

As of December 31, [removed: 2019,] [added: 2020,] we had [removed: $46] [added: $117] million of net unsettled intercompany transactions.

At December 31, [removed: 2019,] [added: 2020,] we had cash and cash equivalents of [removed: $1,230] [added: $1,528] million, of which [removed: $813] [added: $926] million was invested at various short-term market interest rates.

We had no long-term debt at December 31, [removed: 2019.][added: 2020.]

A hypothetical change in the interest rate of 10 basis points at December 31, [removed: 2019] [added: 2020] 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: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

35.

We handle both full container loads as well as Less-than Container Load (LCL) freight, offering [removed: lower] [added: a wider range of shipping options and] rates than [removed: what is] available [removed: directly from] [added: with] the [removed: shipping lines.]

We also generate fees for ancillary [added: origin] services such as [removed: shipping and customs documentation, packing, crating, insurance services, 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 fees and ancillary services.

The following [removed: charts show] [added: chart shows] our [removed: 2019] [added: 2020] revenues by service type:

[removed: ][added: ]

Today Expeditors has approximately [removed: 18,000] [added: 17,500] 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: open new offices.]

At January 31, [removed: 2020,] [added: 2021,] Expeditors, including its majority-owned subsidiaries, is organized functionally in geographic operating segments and operates district offices in the regions identified below.

[removed: The] [added: Expeditor’s] strategic plan is to [removed: grow our business] [added: achieve long-term, sustainable and profitable growth] by focusing on the right markets and, within each market, on the right [removed: customers, that lead to profitable business growth.][added: customers.]

[removed: Expeditors’] [added: Our] teams are aligned on the specific markets of [removed: its] [added: these] focused priorities; on the targeted accounts within those markets; and on ways that we can continue to differentiate ourselves from our competitors.

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

| | 3. | [removed: Leverage] [added: Continue to 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 [removed: import] [added: customs brokerage and in-country] presence. Our main focus remains on developing and integrating our customs systems, expertise and talent, and making investments that enhance and improve our import [added: brokerage] infrastructure and our ability to provide local delivery and support services in China. |

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 [added: chain needs.]

[removed: When] [added: 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.

We leverage regional and local expertise by staffing our districts principally with [added: local] managers and [removed: other key] personnel who are [removed: citizens of] [added: from] the [removed: nations] [added: regions] in which they operate and who have extensive experience in logistics, coupled with a deep understanding of their local market.

Airfreight services accounted for approximately [removed: 36, 40] [added: 47, 36] and [removed: 42] [added: 40] percent of Expeditors' total revenues in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively.

[removed: At the distribution point, either we or an Expeditors'] agent arranges for the consolidated lot to be broken down into its component shipments and for the transportation of the individual shipments to their final destinations.

We estimate that our average airfreight consolidation weighs approximately [removed: 3,000] [added: 3,500] pounds and that a typical consolidation includes merchandise from several shippers.

Ocean freight services accounted for approximately [removed: 27, 28] [added: 23, 27] and [removed: 30] [added: 28] percent of Expeditors' total revenues in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively.

[removed: *Ocean] [added: Ocean] freight [removed: consolidation*:] [added: consolidation:] As an NVOCC, EIO contracts with ocean shipping lines to obtain transportation for a fixed number of containers between various points during a specified time period at an agreed rate.

[removed: Revenues from fees charged to customers for ancillary services that EIO may provide include the preparation of] shipping and customs documentation, packing, crating, insurance services, and the preparation of documentation to comply with local export and import laws.

[removed: Ocean] [added: Prior to 2020, many ocean] carriers [removed: have] incurred substantial operating [removed: losses in recent years,] [added: losses,] and [removed: many] are [added: still] highly leveraged with debt.

Multiple carrier acquisitions and alliances [removed: are occurring] [added: have occurred] and certain carriers are entering into traditional freight forwarding services as they pursue scale and additional market share in an effort to [removed: reduce operating costs and regain their financial footing.][added: improve profitability.]

Customs brokerage and other services accounted for approximately [removed: 37, 32] [added: 30, 37] and [removed: 28] [added: 32] percent of Expeditors' total revenues in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively.

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

The primary competitive factors in the global logistics services industry continue to be price and quality of service, including reliability, responsiveness, expertise, [removed: convenience,] [added: convenience] and scope of operations.

Expeditors emphasizes quality customer [removed: service] [added: service, underscored by a strong commitment to compliance,] and believes that our prices are competitive with the prices of others in the industry.

We devote a significant amount of resources towards the maintenance and enhancement of [removed: systems] [added: technology and digital solutions] in order to meet these customer demands.

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 [removed: future.][added: future or to what degree it will continue to be impacted by the pandemic.]

This [added: historical] pattern has been the result of, or influenced by, numerous factors, including weather patterns, national holidays, consumer demand, new product launches, economic [removed: conditions] [added: conditions, pandemics, governmental policies,] and [added: inter-governmental disputes and] a myriad of other similar and subtle forces.

At December 31, [removed: 2019,] [added: 2020,] Expeditors employed approximately [removed: 18,000] [added: 17,500] people, of which approximately [removed: 11,500] [added: 11,300] were employed in international locations.

[removed: In order to] [added: To] retain the services of highly qualified, experienced, and motivated employees, [removed: Expeditors places] [added: we place] considerable emphasis on our [removed: non-equity] incentive [added: based] compensation programs.

| Jeffrey S. Musser | | [removed: 54] [added: 55] | | President, Chief Executive Officer and Director |

| Eugene K. Alger | | [removed: 59] [added: 60] | | President, Global Services |

| Daniel R. Wall | | [removed: 51] [added: 52] | | President, Global Products |

| Richard H. Rostan | | [removed: 63] [added: 64] | | President, Global Geographies and Operations |

| Bradley S. Powell | | [removed: 59] [added: 60] | | Senior Vice President and Chief Financial Officer |

| Christopher J. McClincy | | [removed: 45] [added: 46] | | Senior Vice President and Chief Information Officer |

| Benjamin G. Clark | | [removed: 51] [added: 52] | | Senior Vice President, Chief Strategy Officer [removed: and Corporate Secretary] |

| Jeffrey F. Dickerman | | [removed: 44] [added: 45] | | Senior Vice President, General Counsel [added: and Corporate Secretary] |

carriers directly.

Coronavirus (COVID-19) impact on our business

The COVID-19 pandemic has significantly affected our business operations for the year ended December 31, 2020, and we expect these disruptive conditions to continue into 2021.

At this time, the main elements of its impact on our business are summarized below:

| | • | Governments have designated our operations as essential business in all regions where we operate because of our important role in supply chains operations worldwide. As such, our districts continue to serve our customers while operating within the regulations established in those countries. |

| | • | We activated our global business continuity plan in the first quarter of 2020 and are continuing to operate under this plan. Our business continuity plan includes measures to protect and safeguard the health of our employees and service providers, such as sanitization of our facilities, providing protective equipment to employees, restricting travel and requiring all employees to work remotely if they are able to. Our plan includes measures to minimize adverse impacts to our operations and those of our customers’ businesses. We have identified areas of the supply chain process that can be supported remotely and through automation, and those that require physical operations and handling. We continue to monitor the continuously rapidly changing situation and adjust our actions, as needed, based on recommendations from governments and local and national health authorities. Subsequent to the first quarter of 2020, we deployed a global recovery plan regionally following local regulations. Our recovery plan is intended to allow employees to gradually and safely move back into offices when health risks subside and governments around the world lift restrictions. Our districts around the world are at different phases of the recovery plan depending on local conditions. |

| | • | Travel restrictions, government mandated lockdowns and additional precautionary measures resulted in business and supply chain disruption, and limited operations in China in the first quarter of 2020, and worldwide starting in March 2020, resulting in sharp decreases in international trade. We have also seen a shift in the goods we handle with a substantial portion of shipments comprising of technology products to support social distancing and working remotely, and to a lesser degree, medical equipment and supplies. In contrast, we have seen significant declines in shipments from our customers in the aerospace, automotive, oil and energy and certain portions of the retail sectors. With the exception of airfreight exports out of North Asia and ocean exports from South Asia, declines in freight volumes have negatively impacted our results of operations for the year ended December 31, 2020, especially in the first three quarters of the year. |

| | • | The above disruptions are threatening the financial stability of our service providers and our ability to efficiently route customer freight. Reduced passenger flight schedules and cancellations have significantly impacted available belly space, limiting our ability to utilize space under our existing capacity agreements with carriers and requiring us to buy space in a tight airfreight market and utilize chartered planes. Subsequent to the first quarter of 2020, there was limited airfreight space capacity, combined with high global demand for shipping Personal Protective Equipment (PPE), medical equipment and supplies and technology products, which created such an imbalance that buy rates increased to unprecedented levels, in particular on |

| | | exports out of North Asia. Most ocean carriers continued to manage their capacity according to market demand through most of the year and experienced excess demand compared to available capacity in the fourth quarter. These freight market conditions create pricing volatility that further challenges Expeditors’ ability to maintain historical unitary profitability. |

| | • | Many of our customers are experiencing disruptions in their revenue and cash flow, including an increased number of bankruptcies, prompting these customers to attempt to renegotiate contractual terms and increasing our accounts receivable collection risk. The growth in our accounts receivable and consequently customer credit exposure have also increased as a result of historically high freight rates. We have continued to apply our established credit control procedures and collection monitoring that have historically been effective in limiting credit losses. These conditions could result in the loss of business and additional bad debt allowances in the future if our customers’ ability to pay further deteriorates. |

These conditions are expected to continue into 2021.

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 in the global economy and slowdown in trade would negatively affect our operations in the future.

open new offices.

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

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

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

In 2020, in light of recent market disruptions, including the impact of the COVID-19, we reviewed and refreshed our strategy to focus on four key strategic initiatives going forward:

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

| | 2. | Grow our business services into and out of Europe, with particular focus on certain defined markets beyond our base-line growth expectations. |

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

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

| | 4. | Grow our customs brokerage offering in South Asia and India by leveraging our strength and expertise in customs brokerage services and developing critical talent, processes and tools. |

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

In May 2020, we acquired a less-than-truckload digital online shipping platform that aligns with our focus on enhancing our digital solutions.

At the distribution point, either we or an Expeditors'

In 2020, as a result of the decline in passenger aircraft capacity availability we have greatly increased our usage of chartered aircrafts.

We expect to continue to utilize charted aircrafts until such time as passenger air traffic returns to historic levels.

Many air carriers remain highly leveraged with debt and incurred historic operating losses in 2020.

As a result, carriers are facing liquidity challenges exacerbated by the global pandemic and are seeking relief under various government support programs.

In particular air carriers are experiencing significant cash flow challenges as a result of passenger flights cancellations.

Uncertainty over recovery of demand for passenger air travel compared to pre-pandemic levels may impact air carriers’ operations and financial stability long term.

This environment requires that we be selective in determining which carriers to utilize.

Revenues from fees charged to customers for ancillary services that EIO may provide include the preparation of

Ocean carriers have improved their management of capacity relative to demand in recent years.

Currently, demand exceeds capacity in certain lanes.

Demand for ocean transportation increased sharply in the second half of 2020, resulting in severe ports congestion, in particular on transpacific lanes.

This has created new operational challenges for carriers including their ability to maintain sailing schedules.

Human Capital

Opportunities for employees and positive work environment

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

Expeditors continues to focus on executing key strategic initiatives that are designed to achieve long-term earnings growth.

While we continue to emphasize expanding our business in North America, we simultaneously remain focused on growth based on three key strategic initiatives:

| | 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. |

chain needs.

Nevertheless, despite our history of organic growth, we are not opposed to acquisitions and we will continue to identify and assess potential acquisitions.

Although airline profitability has improved, many air carriers remain highly leveraged with debt.

Additionally, many carriers continue to take delivery of new and larger ships, which has created excess capacity.

This excess capacity is at the heart of the carriers' financial challenge as they pursue business at lower rate levels to achieve higher load factors.

white glove, and time-definite services.

Expeditors is committed to continual improvement in reducing the impact of our operations on the environment and assisting our customers in their efforts to reduce their carbon footprint.

Employees

Expeditors is a party to collective bargaining agreements with a limited number of employees outside the U.S., and we do not consider these agreements to be material.

We consider our employee relations to be satisfactory.

Other Information

Expeditors International of Washington, Inc. was incorporated in the State of Washington in May 1979.

Our executive offices are located at 1015 Third Avenue, Seattle, Washington, and our telephone number is (206) 674-3400.

Regulation and Security

As of December 31, [removed: 2019,] [added: 2020,] the amounts recorded for these claims, lawsuits, government investigations and other legal matters are not significant to our operations, cash flows or financial position.

For the fiscal year ended December 31, [removed: 2019][added: 2020]

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: 2019,] [added: 2020,] was approximately [removed: $12,821,403,723.][added: $12,607,970,514.]

At February [removed: 18, 2020,] [added: 16, 2021,] the number of shares outstanding of registrant’s Common Stock was [removed: 169,764,263.][added: 169,370,882.]

Portions of the definitive proxy statement for the Registrant’s 2020 Annual Meeting of Shareholders to be held on May [removed: 5, 2020] [added: 4, 2021] are incorporated by reference into Part III of this Form 10-K.

| | Item 1A | [Risk Factors](#ITEM_1A_RISK_FACTORS) | [removed: 13] [added: 15] |

| | Item 1B | [Unresolved Staff Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS) | [removed: 16] [added: 19] |

| | Item 2 | [Properties](#ITEM_2___Properties) | [removed: 16] [added: 20] |

| | Item 3 | [Legal Proceedings](#ITEM_3___Legal_Proceedings) | [removed: 16] [added: 20] |

| | Item 4 | [Mine Safety Disclosures](#ITEM_4___Mine_Safety_Disclosures) | [removed: 16] [added: 20] |

| | Item 5 | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU) | [removed: 16] [added: 21] |

| | Item 6 | [Selected Financial Data](#ITEM_6_SELECTED_FINANCIAL_DATA) | [removed: 18] [added: 23] |

| | Item 7 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7___Management_s_Discussion_and_Ana) | [removed: 19] [added: 24] |

| | Item 7A | [Quantitative and Qualitative Disclosures about Market Risk](#ITEM_7A_QUANTITATIVE_QUALITATIVE_DISCLOS) | [removed: 30] [added: 35] |

| | Item 8 | [Financial Statements and Supplementary Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR) | [removed: 30] [added: 36] |

| | Item 9 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC) | [removed: 31] [added: 36] |

| | Item 9A | [Controls and Procedures](#ITEM_9A_CONTROLS_PROCEDURES) | [removed: 31] [added: 36] |

| | Item 9B | [Other Information](#ITEM_9B_OR_INFORMATION) | [removed: 31] [added: 37] |

| | Item 10 | [Directors, Executive Officers and Corporate Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO) | [removed: 32] [added: 37] |

| | Item 11 | [Executive Compensation](#ITEM_11_EXECUTIVE_COMPENSATION) | [removed: 32] [added: 37] |

| | Item 12 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ITEM_12_SECURITY_OWNERSHIP_CERTAIN_BENEF) | [removed: 32] [added: 38] |

| | Item 13 | [Certain Relationships and Related Transactions and Director Independence](#ITEM_13_CERTAIN_RELATIONSHIPS_RELATED_TR) | [removed: 33] [added: 38] |

| | Item 14 | [Principal Accounting Fees and Services](#ITEM_14_PRINCIPAL_ACCOUNTING_FEES_SERVIC) | [removed: 33] [added: 38] |

| | Item 15 | [Exhibits, Financial Statement Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH) | [removed: 33] [added: 39] |

| | Item 16 | [Form 10-K Summary](#ITEM_16_FORM_10K_SUMMARY) | [removed: 35] [added: 41] |

| | | [Signatures](#SIGNATURES) | [removed: 36] [added: 42] |

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

For the Fiscal Year Ended December 31, 2020

19.

We conduct operations in approximately 450 locations worldwide, of which approximately 100 are in the United States and [removed: 22] [added: 21] are owned.

20.

[removed: In February 2014, the] [added: The] Board of Directors [added: last] authorized repurchases down to [removed: 190] [added: 160] million shares of common stock [removed: outstanding.][added: in November 2018.]

The graph below compares Expeditors International of Washington, Inc.'s cumulative 5-Year total shareholder return on common stock with the cumulative total returns of the S&P 500 index and the NASDAQ Industrial Transportation index [removed: (NQUSB2770T).][added: (NQUSB502060T).]

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: 12/31/2014] [added: 12/31/2015] and tracks it through [removed: 12/31/2019.][added: 12/31/2020.]

[removed: ][added: ]

There were 655 registered holders of record as of February 16, 2021.

| June 15, 2020 | | $ | 0.52 | |

| December 15, 2020 | | $ | 0.52 | |

| October 1-31, 2020 | | | — | | | $ | — | | | | — | | | | 9,265,637 | |

| November 1-30, 2020 | | | — | | | $ | — | | | | — | | | | 9,450,287 | |

| December 1-31, 2020 | | | 200,000 | | | $ | 90.81 | | | | 200,000 | | | | 9,293,647 | |

| Total | | | 200,000 | | | $ | 90.81 | | | | 200,000 | | | | 9,293,647 | |

Subsequently, the Board of Directors has from time to time increased the amount of our common stock that may be repurchased.

21.

| | | 12/15 | | | | 12/16 | | | | 12/17 | | | | 12/18 | | | | 12/19 | | | | 12/20 | | |

| Expeditors International of Washington, Inc. | | $ | 100.00 | | | $ | 119.29 | | | $ | 147.82 | | | $ | 157.45 | | | $ | 182.93 | | | $ | 225.82 | |

| Standard and Poor's 500 Index | | | 100.00 | | | | 111.96 | | | | 136.40 | | | | 130.42 | | | | 171.49 | | | | 203.04 | |

| NASDAQ Industrial Transportation (NQUSB502060T) | | | 100.00 | | | | 129.22 | | | | 164.82 | | | | 149.92 | | | | 188.80 | | | | 247.07 | |

22.

There were 678 shareholders of record as of February 18, 2020.

| June 15, 2018 | | $ | 0.45 | |

| December 17, 2018 | | $ | 0.45 | |

| 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 | |

16.

In February and August 2015, May 2016 and November 2018 the Board of Directors further authorized repurchases down to 188 million, 180 million, 170 million and 160 million, respectively.

| | | 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.

| in thousands, except per share data | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Revenues | | $ | [removed: 8,175,426] [added: 10,116,481] | | | | [removed: 8,138,365] [added: 8,175,426] | | | | [removed: 6,920,948] [added: 8,138,365] | | | | [removed: 6,098,037] [added: 6,920,948] | | | | [removed: 6,616,632] [added: 6,098,037] | |

| Operating income | | $ | [removed: 766,692] [added: 940,437] | | | | [removed: 796,563] [added: 766,692] | | | | [removed: 700,260] [added: 796,563] | | | | [removed: 670,163] [added: 700,260] | | | | [removed: 721,484] [added: 670,163] | |

| Net earnings attributable to shareholders | | $ | [removed: 590,395] [added: 696,140] | | | | [removed: 618,199] [added: 590,395] | | | | [removed: 489,345] [added: 618,199] | | | | [removed: 430,807] [added: 489,345] | | | | [removed: 457,223] [added: 430,807] | |

| Diluted earnings attributable to shareholders per share | | $ | [removed: 3.39] [added: 4.07] | | | | [removed: 3.48] [added: 3.39] | | | | [removed: 2.69] [added: 3.48] | | | | [removed: 2.36] [added: 2.69] | | | | [removed: 2.40] [added: 2.36] | |

| Basic earnings attributable to shareholders per share | | $ | [removed: 3.45] [added: 4.14] | | | | [removed: 3.55] [added: 3.45] | | | | [removed: 2.73] [added: 3.55] | | | | [removed: 2.38] [added: 2.73] | | | | [removed: 2.42] [added: 2.38] | |

| Dividends declared and paid per common share | | $ | [removed: 1.00] [added: 1.04] | | | | [removed: 0.90] [added: 1.00] | | | | [removed: 0.84] [added: 0.90] | | | | [removed: 0.80] [added: 0.84] | | | | [removed: 0.72] [added: 0.80] | |

| Cash used for dividends | | $ | [removed: 170,553] [added: 174,929] | | | | [removed: 156,840] [added: 170,553] | | | | [removed: 150,495] [added: 156,840] | | | | [removed: 145,123] [added: 150,495] | | | | [removed: 135,673] [added: 145,123] | |

| Cash used for share repurchases | | $ | [removed: 389,060] [added: 332,387] | | | | [removed: 647,898] [added: 389,060] | | | | [removed: 478,258] [added: 647,898] | | | | [removed: 337,658] [added: 478,258] | | | | [removed: 629,991] [added: 337,658] | |

| Working capital | | $ | [removed: 1,601,605] [added: 2,070,501] | | | | [removed: 1,407,977] [added: 1,601,605] | | | | [removed: 1,448,333] [added: 1,407,977] | | | | [removed: 1,288,648] [added: 1,448,333] | | | | [removed: 1,115,136] [added: 1,288,648] | |

| Total assets | | $ | [removed: 3,691,884] [added: 4,927,503] | | | | [removed: 3,314,559] [added: 3,691,884] | | | | [removed: 3,117,008] [added: 3,314,559] | | | | [removed: 2,790,871] [added: 3,117,008] | | | | [removed: 2,565,577] [added: 2,790,871] | |

| Shareholders’ equity | | $ | [removed: 2,195,028] [added: 2,659,637] | | | | [removed: 1,986,838] [added: 2,195,028] | | | | [removed: 1,991,858] [added: 1,986,838] | | | | [removed: 1,844,638] [added: 1,991,858] | | | | [removed: 1,691,993] [added: 1,844,638] | |

| Weighted average diluted shares outstanding | | | [removed: 174,209] [added: 170,896] | | | | [removed: 177,833] [added: 174,209] | | | | [removed: 181,666] [added: 177,833] | | | | [removed: 182,704] [added: 181,666] | | | | [removed: 190,223] [added: 182,704] | |

| Weighted average basic shares outstanding | | | [removed: 170,899] [added: 168,333] | | | | [removed: 174,133] [added: 170,899] | | | | [removed: 179,247] [added: 174,133] | | | | [removed: 181,282] [added: 179,247] | | | | [removed: 188,941] [added: 181,282] | |

This Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2019] [added: 2020] 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.

23.

18.

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

| | | | [Balance Sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#CONSOLIDATED_BALANCE_SHEETS)] [added: 2019](#CONSOLIDATED_BALANCE_SHEETS)] | | F-4 |

| | | | [Statements of Earnings for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#CONSOLIDATED_STATEMENTS_EARNINGS)] [added: 2018](#CONSOLIDATED_STATEMENTS_EARNINGS)] | | F-5 |

| | | | [Statements of Comprehensive Income for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] [added: 2018](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] | | F-6 |

| | | | [Statements of Equity for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#CONSOLIDATED_STATEMENTS_EQUITY)] [added: 2018](#CONSOLIDATED_STATEMENTS_EQUITY)] | | F-7 |

| | | | [Statements of Cash Flows for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#Consolidated_Statements_of_Cash_Flows)] [added: 2018](#Consolidated_Statements_of_Cash_Flows)] | | F-8 |

| | | | [Notes to Consolidated Financial Statements](#Notes_to_Consolidated_Financial_Statemen) | | F-9 through [removed: F-24] [added: F-23] |

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: 2019,] [added: 2020,] based on the framework in *Internal Control — Integrated Framework (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: 2019,] [added: 2020,] 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: 2019,] [added: 2020,] which is included on page F-3.

36.

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 caption “Board Operations" in Expeditors' definitive Proxy Statement for its annual meeting of shareholders to be held on May [removed: 5, 2020.][added: 4, 2021.]

The members of the Audit Committee are [removed: Richard B.][added: Robert P.]

Expeditors' Board has determined that [removed: Richard B.][added: Robert P.]

Carlile, [removed: Director] [added: Chairman] of the Audit Committee, [removed: are] [added: is the] audit committee financial [removed: experts] [added: expert] 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.

Dubois and Liane J.

Pelletier.

McCune, Robert P.

Dubois, Alain Monié, and Diane H.

Gulyas.

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

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: 5, 2020.][added: 4, 2021.]

37.

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: 5, 2020.][added: 4, 2021.]

The following table provides information as of December 31, [removed: 2019,] [added: 2020,] regarding compensation plans under which equity securities of Expeditors are authorized for issuance.

| (3) | Includes [removed: 3,158,034] [added: 2,480,805] available for issuance under the employee stock purchase plans and [removed: 744,411] [added: 3,027,906] available for future grants of equity awards under the [added: Amended and Restated 2017] Omnibus Incentive [removed: Plan] [added: Plan.] |

| Equity Compensation Plans Approved by Security Holders | | | 4,746,798 | | | $ | 44.49 | | | | 5,508,711 | |

| Total | | | 4,746,798 | | | $ | 44.49 | | | | 5,508,711 | |

| Equity Compensation Plans Approved by Security Holders | | | 7,871,918 | | | $ | 48.85 | | | | 3,902,445 | |

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

32.

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: 5, 2020.][added: 4, 2021.]

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: 5, 2020.][added: 4, 2021.]

38.

| | | [Consolidated Balance Sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#CONSOLIDATED_BALANCE_SHEETS)] [added: 2019](#CONSOLIDATED_BALANCE_SHEETS)] | | F-4 |

| | | [Consolidated Statements of Earnings for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#CONSOLIDATED_STATEMENTS_EARNINGS)] [added: 2018](#CONSOLIDATED_STATEMENTS_EARNINGS)] | | F-5 |

| | | [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] [added: 2018](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] | | F-6 |

| | | [Consolidated Statements of Equity for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#CONSOLIDATED_STATEMENTS_EQUITY)] [added: 2018](#CONSOLIDATED_STATEMENTS_EQUITY)] | | F-7 |

| | | [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#Consolidated_Statements_of_Cash_Flows)] [added: 2018](#Consolidated_Statements_of_Cash_Flows)] | | F-8 |

| | | [Notes to Consolidated Financial Statements](#Notes_to_Consolidated_Financial_Statemen) | | F-9 through [removed: F-24] [added: F-23] |

| | [removed: (5)] [added: (14)] | Expeditors' 2014 [removed: Directors’ Restricted] Stock [added: Option] Plan. See Exhibit [removed: 10.36.] [added: 10.63.] |

| | [removed: (6)] [added: (5)] | Expeditors' 2002 Amended and Restated Employee Stock Purchase Plan. See Exhibit 10.42. |

| | [removed: (7)] [added: (6)] | Expeditors' [removed: 2009] [added: 2010] Stock Option Plan. See Exhibit [removed: 10.53.] [added: 10.55.] |

| | [removed: (8)] [added: (7)] | 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: (9)] [added: (8)] | Expeditors' [removed: 2010] [added: 2011] Stock Option Plan. See Exhibit [removed: 10.55.] [added: 10.57.] |

| | [removed: (10)] [added: (9)] | 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: (11)] [added: (10)] | Expeditors' [removed: 2011] [added: 2012] Stock Option Plan. See Exhibit [removed: 10.57.] [added: 10.59.] |

| | [removed: (12)] [added: (11)] | 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: (13)] [added: (12)] | Expeditors' [removed: 2012] [added: 2013] Stock Option Plan. See Exhibit [removed: 10.59.] [added: 10.61.] |

| | [removed: (14)] [added: (13)] | 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: (15)] [added: (16)] | Expeditors' [removed: 2013] [added: 2015] Stock Option Plan. See Exhibit [removed: 10.61.] [added: 10.65.] |

| | [removed: (16)] [added: (15)] | 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: (17)] [added: (18)] | Expeditors' [removed: 2014] [added: 2016] Stock Option Plan. See Exhibit [removed: 10.63.] [added: 10.67.] |

| | [removed: (18)] [added: (17)] | 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: (20)] [added: (19)] | 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.] |

| | (22) | 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: Amended and Restated 2017 Omnibus Incentive] Stock [removed: Option] Plan. See Exhibit [removed: 10.68.] [added: 10.69] |

| | [removed: (23)] [added: (20)] | Expeditors' [added: Amended and Restated] 2017 Omnibus Incentive Plan. See Exhibit 10.69 |

| | [removed: (24)] [added: (21)] | Form of Executive Restricted Stock Unit Award Agreement used in connection with executive restricted stock units granted under Expeditors' [added: Amended and Restated] 2017 Omnibus Incentive Stock Plan. See Exhibit [removed: 10.70] [added: 10.69] |

| | [removed: (25)] [added: (23)] | Form of Performance Share Award Agreement used in connection with performance share units granted under Expeditors' [added: Amended and Restated] 2017 Omnibus Incentive Stock Plan. See Exhibit [removed: 10.71] [added: 10.69] |

| [added: [10.72](http://www.sec.gov/Archives/edgar/data/746515/000156459019029862/expd-ex1072_182.htm)] | [removed: (26)] | Form of Performance Share Award Agreement used in connection with performance share units granted under Expeditors' [added: Amended and Restated] 2017 Omnibus Incentive [removed: Stock] Plan. [removed: See] [added: (Incorporated by reference to] Exhibit 10.72 [added: to Form 10-Q filed on or about August 7, 2019.)] |

| [removed: [3.2](http://www.sec.gov/Archives/edgar/data/746515/000074651516000067/ex32-20160503bylawamendment.htm)] [added: [3.2](http://www.sec.gov/Archives/edgar/data/746515/000156459020036140/expd-ex32_32.htm)] | | Expeditors' Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 to Form 8-K, filed on or about [removed: May 6, 2016.)] [added: August 4, 2020.)] |

| [removed: [4.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex41_1166.htm)] [added: [4.1](http://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex41_1166.htm)] | | Description of Registrant’s Securities. [added: (Incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2019, filed on or about February 21, 2020.)] |

| [10.27](http://www.sec.gov/Archives/edgar/data/746515/000074651515000034/a20152qex-1027.htm) | | [added: General] Form of [added: Executive] Employment Agreement [removed: executed by Expeditors' President, Global Products.] (Incorporated by reference to Exhibit 10.27 to Form 10-Q, filed on or about August 6, 2015.) |

| [removed: [10.36](http://www.sec.gov/Archives/edgar/data/746515/000074651514000006/a2014def14a.htm)] [added: [10.42](http://www.sec.gov/Archives/edgar/data/746515/000074651519000009/a2019def14a.htm#s887bef6947b0445bac08527e1ccf618a)] | | Expeditors' [removed: 2014 Directors’ Restricted] [added: Amended and Restated 2002 Employee] Stock [added: Purchase] Plan. (Incorporated by reference to Appendix [removed: D] [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: [10.42](http://www.sec.gov/Archives/edgar/data/746515/000074651514000006/a2014def14a.htm)] [added: [10.69](http://www.sec.gov/Archives/edgar/data/746515/000156459020012523/expd-def14a_20200505.htm)] | | Expeditors' Amended and Restated [removed: 2002 Employee Stock Purchase] [added: 2017 Omnibus Incentive] Plan. (Incorporated by reference to Appendix [removed: A] [added: B] of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March [removed: 27, 2019.)] [added: 24, 2020.)] |

| [removed: [10.54](http://www.sec.gov/Archives/edgar/data/746515/000119312509105730/dex102.htm)] [added: [10.70](http://www.sec.gov/Archives/edgar/data/746515/000074651517000034/exhibit1070formofexecutive.htm)] | | Form of [added: Executive Restricted] Stock [removed: Option] [added: Unit Award] Agreement used in connection with [removed: options] [added: executive restricted stock units] granted under Expeditors' [removed: 2009 Stock Option] [added: Amended and Restated 2017 Omnibus Incentive] Plan. (Incorporated by reference to Exhibit [removed: 10.2] [added: 10.70] to Form [removed: 8-K] [added: S-8] filed on or about May [removed: 11, 2009.)] [added: 16, 2017.)] |

| [removed: [10.69](http://www.sec.gov/Archives/edgar/data/746515/000074651517000034/exhibit10692017omnibusince.htm)] [added: [10.71](http://www.sec.gov/Archives/edgar/data/746515/000074651517000034/exhibit1071formofpsaagreem.htm)] | | [added: Form of Performance Share Award Agreement used in connection with performance share units granted under] Expeditors' [added: Amended and Restated] 2017 Omnibus Incentive Plan. (Incorporated by reference to Exhibit [removed: 10.69] [added: 10.71] to Form S-8 [removed: Registration] filed on or about May 16, 2017.) |

| [removed: [21.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex211_10.htm)] [added: [21.1](https://www.sec.gov/Archives/edgar/data/746515/000156459021006925/expd-ex211_7.htm)] | | Subsidiaries of the registrant. |

| [removed: [23.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex231_8.htm)] [added: [23.1](https://www.sec.gov/Archives/edgar/data/746515/000156459021006925/expd-ex231_11.htm)] | | Consent of Independent Registered Public Accounting Firm. |

| [removed: [31.1](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex311_9.htm)] [added: [31.1](https://www.sec.gov/Archives/edgar/data/746515/000156459021006925/expd-ex311_6.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/746515/000156459020005719/expd-ex312_6.htm)] [added: [31.2](https://www.sec.gov/Archives/edgar/data/746515/000156459021006925/expd-ex312_10.htm)] | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |

| [removed: [32](https://www.sec.gov/Archives/edgar/data/746515/000156459020005719/expd-ex32_7.htm)] [added: [32](https://www.sec.gov/Archives/edgar/data/746515/000156459021006925/expd-ex32_9.htm)] | | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

| 104 | | The cover page from the Company’s Yearly Report on Form 10-K for the year ended December 31, [removed: 2019,] [added: 2020,] has been formatted in Inline XBRL |

| | (3) | General Form of Executive Employment Agreement. See Exhibit 10.27. |

39.

40.

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

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

33.

| | (19) | Expeditors' 2015 Stock Option Plan. See Exhibit 10.65. |

| | (21) | Expeditors' 2016 Stock Option Plan. See Exhibit 10.67. |

| | | |

| [10.53](http://www.sec.gov/Archives/edgar/data/746515/000119312509059806/ddef14a.htm) | | Expeditors' 2009 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 20, 2009.) |

34.

| [10.70](http://www.sec.gov/Archives/edgar/data/746515/000074651517000034/exhibit1070formofexecutive.htm) | | Form of Executive Restricted Stock Unit Award Agreement used in connection with executive restricted stock units granted under Expeditors' 2017 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.70 to Form S-8 filed on or about May 16, 2017.) |

| [10.71](http://www.sec.gov/Archives/edgar/data/746515/000074651517000034/exhibit1071formofpsaagreem.htm) | | Form of Performance Share Award Agreement used in connection with performance share units granted under Expeditors' 2017 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.71 to Form S-8 filed on or about May 16, 2017.) |

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

Date: February [removed: 21, 2020][added: 19, 2021]

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: 21, 2020.][added: 16, 2021.]

YEARS ENDED DECEMBER 31, [added: 2020,] 2019, [removed: 2018,] AND [removed: 2017][added: 2018]

We have audited the accompanying consolidated balance sheets of Expeditors International of Washington, Inc. and subsidiaries (the Company) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] 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: 2019,] [added: 2020,] 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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, [removed: 2019,] [added: 2020,] 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: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February [removed: 21, 2020] [added: 19, 2021] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

As discussed in Notes [removed: 1M] [added: 1E] 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.

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 [removed: judgment.][added: judgments.]

| [removed: February 21,] [added: |] 2020 | [added: | | | | | | | | | | | |]

We have audited Expeditors International of Washington, Inc.’s and subsidiaries’ (the Company) internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (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: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] 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: 2019,] [added: 2020,] and the related notes (collectively, the consolidated financial statements), and our report dated February [removed: 21, 2020] [added: 19, 2021] expressed an unqualified opinion on those consolidated financial statements.

| December 31, | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | |

| Cash and cash equivalents [added: at beginning of period] | | [removed: $] | 1,230,491 | | | [removed: $] | 923,735 | | [added: | | 1,051,099 | |]

| Accounts receivable, net | | | [removed: 1,315,091] [added: 1,998,055] | | | | [removed: 1,581,530] [added: 1,315,091] | |

| Deferred contract costs | | | [removed: 131,783] [added: 327,448] | | | | [removed: 159,510] [added: 131,783] | |

| Other | | | [removed: 92,558] [added: 110,250] | | | | [removed: 70,041] [added: 92,558] | |

| Total current assets | | | [removed: 2,769,923] [added: 3,963,544] | | | | [removed: 2,734,816] [added: 2,769,923] | |

| Property and equipment, net | | | [removed: 499,344] [added: 506,425] | | | | [removed: 504,105] [added: 499,344] | |

| Operating lease right-of-use assets | | | [removed: 390,035] [added: 432,723] | | | | [removed: —] [added: 390,035] | |

| Deferred federal and state income taxes, net | | | [removed: 8,034] [added: —] | | | | [removed: 40,465] [added: 8,034] | |

| Other assets, net | | | [removed: 16,621] [added: 16,884] | | | | [removed: 27,246] [added: 16,621] | |

| Total assets | | $ | [removed: 3,691,884] [added: 4,927,503] | | | $ | [removed: 3,314,559] [added: 3,691,884] | |

| Accounts payable | | $ | [removed: 735,695] [added: 1,136,859] | | | $ | [removed: 902,259] [added: 735,695] | |

| Accrued expenses, primarily salaries and related costs | | | [removed: 189,446] [added: 257,021] | | | | [removed: 215,813] [added: 189,446] | |

| Contract liabilities | | | [removed: 154,183] [added: 379,722] | | | | [removed: 190,343] [added: 154,183] | |

| Current portion of operating lease liabilities | | | [removed: 65,367] [added: 74,004] | | | | [removed: —] [added: 65,367] | |

| Federal, state and foreign income taxes | | | [removed: 23,627] [added: 45,437] | | | | [removed: 18,424] [added: 23,627] | |

| Total current liabilities | | | [removed: 1,168,318] [added: 1,893,043] | | | | [removed: 1,326,839] [added: 1,168,318] | |

| Noncurrent portion of operating lease liabilities | | | [removed: 326,347] [added: 364,185] | | | | [removed: —] [added: 326,347] | |

| Common stock, par value $0.01 per share, authorized 640,000. Issued and [removed: outstanding: 169,622] [added: outstanding:169,294] shares at December 31, [removed: 2019] [added: 2020] and [removed: 171,582] [added: 169,622] shares at December 31, [removed: 2018] [added: 2019] | | | [removed: 1,696] [added: 1,693] | | | | [removed: 1,716] [added: 1,696] | |

| Additional paid-in capital | | | [removed: 3,203] [added: 157,496] | | | | [removed: 1,896] [added: 3,203] | |

| Retained earnings | | | [removed: 2,321,316] [added: 2,600,201] | | | | [removed: 2,088,707] [added: 2,321,316] | |

| Accumulated other comprehensive loss | | | [removed: (131,187] [added: (99,753] | ) | | | [removed: (105,481] [added: (131,187] | ) |

| Total shareholders’ equity | | | [removed: 2,195,028] [added: 2,659,637] | | | | [removed: 1,986,838] [added: 2,195,028] | |

| Noncontrolling interest | | | [removed: 2,191] [added: 3,590] | | | | [removed: 882] [added: 2,191] | |

| Total equity | | | [removed: 2,197,219] [added: 2,663,227] | | | | [removed: 1,987,720] [added: 2,197,219] | |

| Total liabilities and equity | | $ | [removed: 3,691,884] [added: 4,927,503] | | | $ | [removed: 3,314,559] [added: 3,691,884] | |

| Years ended December 31, | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | |

| Airfreight services | | $ | [removed: 2,929,882] [added: 4,784,402] | | | $ | [removed: 3,271,932] [added: 2,929,882] | | | $ | [removed: 2,877,032] [added: 3,271,932] | |

41.

42.

| February 19, 2021 |

| February 19, 2021 |

| Cash and cash equivalents | | $ | 1,527,791 | | | $ | 1,230,491 | |

| Deferred federal and state income taxes, net | | | 7,048 | | | | — | |

| Shares issued under employee stock plans | | | 4,255 | | | | 42 | | | | 179,442 | | | | — | | | | — | | | | 179,484 | | | | — | | | | 179,484 | |

| Shares issued under employee stock plans | | | 3,377 | | | | 34 | | | | 141,537 | | | | — | | | | — | | | | 141,571 | | | | — | | | | 141,571 | |

| Cumulative adjustment for adoption of new accounting pronouncement | | | — | | | | — | | | | — | | | | 6,074 | | | | — | | | | 6,074 | | | | — | | | | 6,074 | |

| Shares issued under employee stock plans | | | 4,272 | | | | 43 | | | | 175,736 | | | | — | | | | — | | | | 175,779 | | | | — | | | | 175,779 | |

| Share repurchased under provisions of stock repurchase plan | | | (4,600 | ) | | | (46 | ) | | | (84,941 | ) | | | (247,400 | ) | | | — | | | | (332,387 | ) | | | — | | | | (332,387 | ) |

| Net earnings | | | — | | | | — | | | | — | | | | 696,140 | | | | — | | | | 696,140 | | | | 2,074 | | | | 698,214 | |

| Dividends paid ($1.04) | | | — | | | | — | | | | 1,000 | | | | (175,929 | ) | | | — | | | | (174,929 | ) | | | — | | | | (174,929 | ) |

| Balance at December 31, 2020 | | | 169,294 | | | | 1,693 | | | | 157,496 | | | | 2,600,201 | | | | (99,753 | ) | | | 2,659,637 | | | | 3,590 | | | | 2,663,227 | |

| Net earnings | | $ | 698,214 | | | $ | 592,016 | | | $ | 619,790 | |

| Depreciation and amortization | | | 56,959 | | | | 50,950 | | | | 54,019 | |

| Other, net | | | 1,516 | | | | 1,007 | | | | (925 | ) |

See Note 10 below for further information.

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 enough to affect expected credit losses.

Effective January 1, 2020 the Company adopted a new accounting standard for measurement of credit losses on financial instruments and made a reduction to the opening balance of allowance for credit loss of $8 million.

See Note 1.N below for further information.

transportation expenses are volume, sell rates and buy rates.

G.

regulatory or commercial limitations on the Company’s ability to move money freely.

N.

Effective January 1, 2020, the Company adopted a new accounting standard update related to the measurement of credit losses on financial instruments.

The Company adopted this standard using the modified retrospective transition method resulting in a $6 million adjustment to the opening balance of retained earnings and an $8 million reduction to the opening balance of allowance for credit loss.

| | | | 2020 | | | | 2019 | | |

| | 2021 | | $ | 89,317 | |

| | 2022 | | | 82,920 | |

| | 2023 | | | 70,654 | |

| | 2024 | | | 55,981 | |

| | 2025 | | | 50,006 | |

| | Thereafter | | | 157,576 | |

| | Lease liability | | $ | 438,189 | |

| | | | 2020 | | | | 2019 | | |

| | | | 2020 | | | | 2019 | | |

Cumulative shares repurchased since inception of the plans were 118,591 at an average price of $43.82.

The Amended 2017 Plan also provides for annual equity awards to non-employee directors.

35.

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

| | | |

| /s/ Richard B. McCune | | Director |

| (Richard B. McCune) | | |

| /s/ Alain Monié | | Director |

| (Alain Monié) | | |

36.

| Balance at December 31, 2016 | | | 179,857 | | | $ | 1,799 | | | $ | 2,642 | | | $ | 1,944,789 | | | $ | (104,592 | ) | | $ | 1,844,638 | | | $ | 2,575 | | | $ | 1,847,213 | |

| Exercise of stock options and release of restricted shares | | | 4,058 | | | | 40 | | | | 176,285 | | | | — | | | | — | | | | 176,325 | | | | — | | | | 176,325 | |

| Issuance of shares under stock purchase plan | | | 682 | | | | 7 | | | | 28,760 | | | | — | | | | — | | | | 28,767 | | | | — | | | | 28,767 | |

| Shares repurchased under provisions of stock repurchase plans | | | (8,223 | ) | | | (82 | ) | | | (258,049 | ) | | | (220,127 | ) | | | — | | | | (478,258 | ) | | | — | | | | (478,258 | ) |

| Net earnings | | | — | | | | — | | | | — | | | | 489,345 | | | | — | | | | 489,345 | | | | 1,038 | | | | 490,383 | |

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

| Exercise of stock options and release of restricted shares | | | 3,589 | | | | 36 | | | | 146,157 | | | | — | | | | — | | | | 146,193 | | | | — | | | | 146,193 | |

| Issuance of shares under stock purchase plan | | | 666 | | | | 6 | | | | 33,285 | | | | — | | | | — | | | | 33,291 | | | | — | | | | 33,291 | |

| Exercise of stock options and release of restricted shares | | | 2,792 | | | | 28 | | | | 103,668 | | | | — | | | | — | | | | 103,696 | | | | — | | | | 103,696 | |

| Issuance of shares under stock purchase plan | | | 585 | | | | 6 | | | | 37,869 | | | | — | | | | — | | | | 37,875 | | | | — | | | | 37,875 | |

| Proceeds from sale of property and equipment | | | 579 | | | | 215 | | | | 84,405 | |

| Other, net | | | 428 | | | | (1,140 | ) | | | (1,074 | ) |

| Distributions to noncontrolling interest | | | — | | | | (1,796 | ) | | | (904 | ) |

| Cash and cash equivalents at beginning of period | | | 923,735 | | | | 1,051,099 | | | | 974,435 | |

| --- | --- |

The Company maintains an allowance for doubtful accounts, which is reviewed at least monthly for estimated losses resulting from the inability of its customers to make required payments for services and advances.

Additional allowances may be necessary in the future if the ability of its customers to pay deteriorates.

The Company satisfied nearly all performance obligations for the contract liabilities recorded upon adoption at January 1, 2018, and recognized the corresponding revenues and costs during the first quarter of 2018.

In conjunction with the adoption of Topic 606, the Company also changed its presentation of certain warehouse and distribution revenues from a net to a gross basis, which increased customs brokerage and other services revenues and operating expenses by approximately $225 million in 2018 compared to 2017.

Comparative prior year information has not been adjusted and continues to be reported under the Company's historical revenue recognition policies.

F.

Accordingly, prior to the implementation of the requirements of U.S. tax reform under the Tax Cuts and Jobs Act (2017 Tax Act) in December of 2017, U.S. Federal and State income taxes were provided for all undistributed earnings net of related foreign tax credits.

See Note 7 for impacts associated with U.S. tax reform under the 2017 Tax Act.

Beginning on January 1, 2017, the Company adopted accounting guidance requiring that, prospectively, excess tax benefits and deficiencies be recorded in income tax expense for stock option exercises, cancellations and disqualifying dispositions of employee stock purchase plan shares.

H.

In June 2016, the FASB issued an Accounting Standards Update (ASU), which amends existing guidance for the accounting of credit losses on financial instruments.

The Company will adopt this standard effective January 1, 2020 with a cumulative effect of adoption recorded as an adjustment to retained earnings.

In December 2017, the Company sold land and buildings in Miami, Florida, which had a net book value of $80 million.

The Company recorded a $4 million gain from the sale in 2017, which is reported in the United States segment within other operating expenses in the consolidated statements of earnings.

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

| | 2020 | | $ | 81,713 | |

| | 2021 | | | 72,881 | |