Expeditors International of Washington (EXPD) 10-K risk factor changes: FY2022 vs FY2021

[removed: COVID-19] [added: 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 [removed: business.][added: business.]

Any significant disruption [removed: resulting from this] on [removed: a large] [added: the] scale [removed: or] [added: of the COVID-19 pandemic] over an extended period [removed: of time would] [added: could] negatively affect our business and our financial results.

[removed: The COVID-19 pandemic] [added: Such a disruption] could also have the effect of heightening many of the other risks described below.

[removed: We] [added: 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 [removed: COVID-19,] [added: COVID-19 or other factors,] it may adversely impact our business and operating [removed: results.][added: results.]

During the pandemic, air carriers have been particularly affected having to cancel flights due to travel restrictions resulting in [added: dramatic drops in revenues, historical losses, high leverage and liquidity challenges.]

[added: Disruptions such as] COVID-19 [removed: places] [added: place] significant stress on our air, ocean and freight ground carriers, as well as other service providers, which may [removed: continue to] result in reduced carrier capacity or availability, pricing volatility or more limited carrier transportation schedules and other services that we utilize, which could adversely impact our operations and financial results.

[removed: Global] [added: Global] economic uncertainty impacted trade and could affect demand for our services or the financial stability of our service providers and [removed: customers.][added: customers.]

The global economy entered a recession as a result of the pandemic, which initially affected trade and negatively affected demand for our services for a period of time, before rebounding in [removed: 2021.][added: 2021 and continuing into 2022.]

Future unfavorable economic [removed: conditions] [added: conditions, rising interest rates] and high inflation could result in lower freight [removed: volumes] [added: volumes, reduced sell rates, higher operating expenses] and [added: may] adversely affect Expeditors' revenues, operating results and cash flows.

[removed: Any] [added: Any] reduction in international commerce or disruption in global trade may adversely impact our business and operating [removed: results.][added: results.]

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

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

[removed: | | • |] 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: |]

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

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

[removed: | | • |] changes in labor and other costs, including the [removed: potential] impacts of inflation; [removed: |]

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

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

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

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

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

Nevertheless, many of these competitors have significantly more resources than Expeditors and [removed: are actively pursuing] [added: may pursue] acquisition opportunities and are developing new technologies to gain competitive advantages.

Customers regularly solicit bids from competitors in order to improve service and to secure favorable pricing and contractual terms such [removed: as] [added: as:] longer payment [removed: terms,] [added: terms;] fixed-price [removed: arrangements,] [added: arrangements;] higher or unlimited liability [removed: limits] [added: limits; heightened cybersecurity] and [added: data privacy obligations; and] performance penalties.

[removed: We] [added: We] are dependent on our personnel and any inability to hire, develop or retain our key employees may have a negative impact on our [removed: operations.][added: operations.]

[removed: Identifying,] [added: In the long term, identifying,] recruiting, hiring, training, and retaining employees is essential to our ability to operate and deliver our services, ability to grow and ultimately our future profitability.

The global pandemic [removed: has] caused disruptions to our work environment by requiring the majority of employees to work [removed: remotely.][added: remotely during the height of the pandemic.]

As [removed: the] pandemic restrictions [removed: ease,] [added: eased,] we [removed: are requiring] [added: required] employees to return to the office.

As a result, for those individuals that prefer working remotely, we may experience a higher degree of turnover [added: of key employees] and lower employee satisfaction in the near future.

Further, this could inhibit our ability to identify, recruit, and hire new [removed: employees.][added: employees over time.]

[added: We cannot predict how this may affect employees’ habits, preferences nor the] impact it may have on our Company’s culture and our ability to continue to retain and attract talented employees who have become accustomed to a remote work environment.

Additionally, we may incur higher compensation-related expense to recruit and retain [added: and incur additional significant expense to hire third parties to perform tasks that have historically been performed by our] employees.

[removed: We] [added: We] rely heavily upon the flexibility and sophistication of the technologies used in our core business and failure to properly [removed: manage such] [added: manage, enhance and update] technologies could lead to disruptions in our operations or our ability to remain [removed: competitive.][added: competitive.]

[removed: Any] [added: Any] significant disruptions to our network and systems continuity could have an adverse impact to our business and financial [removed: results.][added: results.]

This [added: cyber-attack, or any future] cyber-attack could also result in increased vulnerability to attempts of fraud, legal claims and proceedings including potential breach of contract claims, reporting delays or errors; interference with regulatory reporting; an increase in costs to protect our systems and technology; or damage to our reputation.

[removed: We] [added: We] rely on service providers, including air, ocean, ground freight carriers and others, and if they have insufficient capacity available relative to market demand, or reduce our capacity allotments, it may adversely impact our business and operating [removed: results.][added: results.]

Our ability to deliver our services depends on service [removed: providers’] [added: providers] having sufficient capacity available to purchase.

When market demand significantly exceeds available capacity in a given market, which [removed: has been increasingly] [added: was] the case for various services and markets [removed: since] [added: at] the beginning of the pandemic in [removed: 2020,] [added: 2020 and that continued through the first half of 2022,] we may not always be able to find acceptable transportation or other service solutions to meet our customers’ needs or the routing and delivery of freight may be subject to delays that are outside of our control.

[removed: Failure] [added: Failure] to grow and gain profitable market share could adversely impact our ability to remain competitive and could adversely impact our [removed: business.][added: business.]

[removed: Any] [added: Any] disruption of our business caused by a catastrophic event, could harm our ability to conduct normal business operations and impact our operating [removed: results.][added: results.]

[removed: We Face Risks Associated] [added: We face risks associated] with the [removed: Handling] [added: handling] of [removed: Customer Inventory][added: customer inventory]

We may be impacted by residual effects of the COVID-19 pandemic or a new and similarly disruptive global health emergency.

In early 2020, COVID-19 was declared a global health emergency and later declared a global pandemic by the World Health Organization, prompting governments around the world to mandate lockdowns and other restrictions that had direct impacts on international trade.

The COVID-19 pandemic and various government reactions to it contributed to shortages of labor and capacity, and increased costs that continue to impact our operations.

While many of the COVID-19 restrictions have been eased or discontinued entirely, various protocols and policies continue to be implemented or contemplated in early 2023, as a resurgence of COVID-19 remains a possibility.

There is no guarantee that a continuation or resurgence of COVID-19 or a variant, or a similarly disruptive health emergency, would impact us similar to how COVID-19 has impacted our operations since 2020.

The pandemic caused significant disruptions in global supply chain operations that were further exacerbated by congestion at destination ports and shortages of equipment, labor and warehouse space.

In response to these conditions, we hired additional employees in 2021 and 2022 to be able to service customers and navigate through these challenges.

Though these disruptions substantially cleared by the fourth quarter of 2022, our number of employees at December 31, 2022, remain at historically high levels.

In the short term, any reductions in our workforce could result in significant additional expenses.

Conversely, a failure to reduce compensation expense and other expenses in periods when the business environment does not support our workforce level will result in substantially lower compensation earned by the majority of employees.

This may challenge our ability to retain and attract key employees to conduct our business successfully.

We cannot predict how management’s responses to these challenges will ultimately impact our Company culture, financial position, results of operations and cash flows nor our ability to successfully attract and retain key employees in the future.

20.

We cannot currently provide an estimate of the range of possible outcomes.

21.

We identified a material weakness in our internal control related to an ineffective information technology general control which, if not remediated appropriately or timely, could result in loss of investor confidence and adversely impact our stock price.

Internal controls related to the operation of technology systems are critical to maintaining adequate internal control over financial reporting.

As disclosed in Part II, Item 9A, during the fourth quarter of 2022, management identified a material weakness in internal control related to certain database changes made to an information technology (IT) system that supports the Company’s financial reporting processes.

As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2022.

Subsequent to the identification of the material weakness and prior to the issuance of these financial statements included in this Form 10-K, the Company (i) performed a lookback review of all direct changes made to the database subject to the control operating ineffectiveness for the full year 2022, and (ii) conducted supplemental procedures and found no evidence of improper changes or changes with direct or consequential impact on internal controls over financial reporting.

As a result of identifying this issue, management will be implementing certain enhancements designed to strengthen IT program change management processes and will continue to conduct monthly supplemental lookback review procedures of direct database changes until improvements are fully in place.

We expect that such enhancements will be completed prior to the end of 2023.

To the extent management is unable to remediate the identified issue timely, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

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 and 2021 and continuing into 2022, governments have implemented travel restrictions, mandated lockdowns and other precautionary measures that resulted in significant business and supply chain disruptions and has had direct impacts on 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 have been working remotely.

As discussed in more detail under “Results of Operations”, there are significant constraints on current capacity for both air freight and ocean freight.

This is due to a number of factors, including reduced flight schedules from pre-pandemic levels and new regulations, which limited available belly space for cargo, congestion at ports resulting from labor and equipment shortages and insufficient warehousing space at destinations.

Air freighters and charters, container ships and gateway infrastructure are operating at near maximum capacity.

While we believe these constraints are not long-term in nature, they impact our current ability to move increased air and ocean volumes in these capacity-constrained regions.

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 revenues and cash flows and have incurred higher operating expenses as a result of supply chain cost increases and other inflationary pressures.

This has caused some customers to renegotiate contractual terms, increasing our accounts receivable collection and extended liability risks.

Such conditions could result in the loss of business and additional credit losses 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.

Throughout 2021 and into 2022, transportation rates have risen to historically high levels.

We believe that as Covid-19 disruptions recede, and passenger air travel rebounds, that port congestion will improve.

This will result in additional transportation capacity becoming available.

Rates will likely decline as this occurs.

On a limited basis, we have entered in to fixed-rate buy agreements to secure space in the air and ocean markets.

Future declines of sell rates will negatively affect our operating income and cash flows.

15.

dramatic drops in revenues, historical losses, high leverage and liquidity challenges.

Prior to 2021, ocean carriers have incurred significant operating losses are still highly leveraged with debt.

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

We cannot predict how this may affect employees’ habits, preferences nor the

We generate the major portion of our air and ocean freight revenues by purchasing transportation services on a [removed: wholesale] [added: volume] basis from direct (asset-based) carriers and then reselling [removed: those services] [added: that space] to our [removed: customers on a retail basis.][added: customers.]

In turn, when the freight is physically tendered to a direct carrier, we receive a contract of carriage known as a Master Airway Bill for airfreight shipments and a Master Ocean Bill of Lading [added: (MOBL)] for ocean shipments.

[removed: ][added: ]

North Asia is our largest export-oriented region and accounted for [removed: 39%] [added: 34%] of revenues, [removed: 44%] [added: 39%] of directly related cost of transportation and other expenses and [removed: 29%] [added: 25%] of operating income for the year ended December 31, [removed: 2021.][added: 2022.]

Highlights from [removed: 2021][added: 2022]

[removed: In 2021, the] [added: The] COVID-19 [removed: pandemic] [added: pandemic, including the effect of ongoing quarantine requirements in China] and resulting disruptions on supply [removed: chains] [added: chains,] continued to [removed: significantly] affect our business operations and financial [removed: results, and we expect these disruptive conditions to continue at least through the first half of 2022.][added: results.]

[removed: | | • | Net earnings to shareholders increased 103%] [added: Operating cash flows were $2,130 million] and we returned [removed: $710] [added: $1,796] million to shareholders [removed: in] [added: through] common stock repurchases and dividends. [removed: |]

[removed: Upon discovering] [added: In] the [removed: incident, we] [added: first quarter of 2022, our company was the subject of a targeted cyber-attack which resulted in having to] shut down most of our [added: connectivity,] operating [added: and accounting] systems globally to manage the safety of our entire global systems environment.

We had limited ability to conduct operations [removed: during this time,] [added: for a period of approximately three weeks,] including but not limited to arranging for shipments of freight or managing customs and distribution activities for our customers’ shipments.

The Company expects that the [removed: impact of the shutdown and the ongoing impacts of the] [added: February 2022] cyber-attack will [added: not] have a material adverse impact on its [added: future] business, revenues, expenses, results of [removed: operations, cash flows] [added: operations] and [removed: reputation.][added: cash flows.]

Periodically, governments consider a variety of changes to tariffs and [added: impose] trade restrictions and accords.

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

As governments implement [removed: higher tariffs] [added: restrictions] on [removed: imports,] [added: imports and exports,] manufacturers may [removed: accelerate,] [added: change sourcing patterns,] to the extent possible, [removed: shipments to avoid higher tariffs] and, over time, may shift manufacturing to other countries.

Many air carriers are [removed: experiencing] [added: recovering from] significant cash flow challenges [added: and record operating losses incurred in 2020 and 2021] as a result of travel restrictions resulting in cancellation of [removed: flights and have received government relief and incurred record operating losses in 2020 and 2021.][added: flights.]

Uncertainty over recovery of demand for [added: trans-pacific] passenger air travel, in particular business travel, compared to pre-pandemic levels may impact air carriers’ operations and financial stability long term.

The global economic and trade environments remain uncertain, including the [removed: ongoing] [added: potential future] impacts of the [removed: pandemic.][added: pandemic, higher inflation and oil prices, rising interest rates and the conflict in Ukraine.]

We cannot predict [removed: the] [added: what further] impact [removed: of future changes] [added: ongoing uncertainties] in [added: the] global [removed: trade] [added: economy, inflation, rising interest rates, political uncertainty nor the pandemic may have] on our operating results, freight volumes, pricing, [removed: inflation,] [added: amounts advanced on behalf of our customers,] changes in consumer demand, carrier stability and capacity, customers’ abilities to pay or [removed: on] changes in competitors' behavior.

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

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

The total amount of our income and non-income tax contingencies may increase in [removed: 2022.][added: 2023.]

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

We believe it is reasonably possible that many countries and jurisdictions will increase their tax rates or otherwise [added: implement tax reforms that would be expected to increase the total tax expense that we will incur in those locations.]

This section of this Form 10-K generally discusses year-to-year comparisons between the results of operations for the year ended December 31, [removed: 2021] [added: 2022] compared to the year ended December 31, [removed: 2020.][added: 2021.]

For a discussion of the year ended December 31, [removed: 2020] [added: 2021] compared to the year ended December 31, [removed: 2019,] [added: 2020,] please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, [removed: 2020 and see “Correction of immaterial error” note, below.][added: 2021.]

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: 2021, 2020] [added: 2022, 2021] and [removed: 2019.][added: 2020.]

| In thousands | | [removed: 2021] [added: 2022] | | | | [removed: 2020] [added: 2021] | | | | [removed: 2019] [added: 2020] | | | | [removed: 2021] [added: 2022] vs. [removed: 2020] [added: 2021] |

| [removed: Revenues1] [added: Revenues] | | $ | [removed: 6,771,402] [added: 5,886,886] | | | $ | [removed: 4,274,026] [added: 6,771,402] | | | $ | [removed: 2,740,938] [added: 4,274,026] | | | [removed: 58%] [added: (13)%] |

| Salaries and related costs | | | [removed: 2,062,351] [added: 2,056,387] | | | | [removed: 1,538,104] [added: 2,062,351] | | | | [removed: 1,422,315] [added: 1,538,104] | | | [removed: 34%] [added: —] |

| Other | | | [removed: 493,685] [added: 613,629] | | | | [removed: 449,150] [added: 493,685] | | | | [removed: 447,461] [added: 449,150] | | | [removed: 10%] [added: 24%] |

| Total overhead expenses | | | [removed: 2,556,036] [added: 2,670,016] | | | | [removed: 1,987,254] [added: 2,556,036] | | | | [removed: 1,869,776] [added: 1,987,254] | | | [removed: 29%] [added: 4%] |

| Operating income | | | [removed: 1,909,326] [added: 1,824,371] | | | | [removed: 940,437] [added: 1,909,326] | | | | [removed: 766,692] [added: 940,437] | | | [removed: 103%] [added: (4)%] |

| Other income, net | | | [removed: 15,290] [added: 11,520] | | | | [removed: 16,127] [added: 15,290] | | | | [removed: 29,102] [added: 16,127] | | | [removed: (5)%] [added: (25)%] |

| Earnings before income taxes | | | [removed: 1,924,616] [added: 1,835,891] | | | | [removed: 956,564] [added: 1,924,616] | | | | [removed: 795,794] [added: 956,564] | | | [removed: 101%] [added: (5)%] |

| Income tax expense | | | [removed: 505,771] [added: 475,286] | | | | [removed: 258,350] [added: 505,771] | | | | [removed: 203,778] [added: 258,350] | | | [removed: 96%] [added: (6)%] |

| Net earnings | | | [removed: 1,418,845] [added: 1,360,605] | | | | [removed: 698,214] [added: 1,418,845] | | | | [removed: 592,016] [added: 698,214] | | | [removed: 103%] [added: (4)%] |

| Less net earnings attributable to the noncontrolling interest | | | [removed: 3,353] [added: 3,206] | | | | [removed: 2,074] [added: 3,353] | | | | [removed: 1,621] [added: 2,074] | | | [removed: 62%] [added: (4)%] |

| Net earnings attributable to shareholders | | $ | [removed: 1,415,492] [added: 1,357,399] | | | $ | [removed: 696,140] [added: 1,415,492] | | | $ | [removed: 590,395] [added: 696,140] | | | [removed: 103%] [added: (4)%] |

[removed: Airfreight services:][added: *Airfreight services:*]

Airfreight services revenues and expenses [removed: increased 58%] [added: decreased 13%] and [removed: 60%,] [added: 14%,] respectively, in [removed: 2021,] [added: 2022,] as compared with [removed: 2020,] [added: 2021,] due to a [removed: 26% increase] [added: 17% decrease] in tonnage [removed: and 28% and 29%] [added: offset by 3%] increases in [added: both] average sell and buy rates, respectively.

[removed: Average sell and buy rates increased] [added: Containers shipped were lower] in all [removed: regions and] [added: regions,] most significantly on exports out of North [removed: Asia and South] Asia.

Revenues and directly related operating expenses increased 3% and 4%, respectively, from higher average buy and sell rates, while operating income and net earnings to shareholders both declined 4% due to higher operating expenses.

Operational conditions remained challenging and uncertain in 2022.

Imbalances between carrier available capacity and customer demand that were severe at the beginning of the year gradually eased throughout the year.

Congestion at destination ports, shortages in equipment, labor and warehouse space that were significant at the beginning of the year cleared by the fourth quarter.

Volumes transacted in most services were down due to softening customer demand and from a slowdown in the global economy and retail customers' inventory build-up early in the year.

Average buy and sell rates, while still higher than historical levels, progressively declined throughout the year as imbalances between available capacity for transportation and demand and major port congestion have dissipated.

While we continued to navigate residual effects and incorporate learnings from the cyber-attack, our core systems were utilized to deliver our services from the second quarter and on.

We incurred additional expenses of $65 million, net of recoveries, and experienced a loss of revenues that cannot be quantified as a result of this attack.

We do not have employees, assets, or operations in Russia or Ukraine.

While very limited, any shipment activity is conducted with independent agents in those countries in compliance with all applicable trade sanctions, laws and regulations.

Starting in the second quarter and continuing through the fourth quarter, we saw a slowdown in the global economy and a softening of customer demand resulting in declines in average buy and sell rates.

As demand softened and pandemic restrictions subsided, port congestion cleared, availability of labor and equipment eased resulting in excess carrier capacity over demand.

These conditions could result in further declines in average sell and buy rates in 2023.

We also expect that pricing volatility will continue as carriers adapt to lower demand, changing fuel prices and react to governmental trade policies and other regulations.

We cannot currently provide an estimate of the range of possible outcomes.

U.S. corporate income tax laws and regulations include a territorial tax framework and provisions for Global Intangible Low-Taxed Income (GILTI) under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries, Base Erosion and Anti-Abuse Tax (BEAT) under which taxes are imposed on certain base eroding payments to affiliated foreign companies as well as U.S. income tax deductions for Foreign-derived intangible income (FDII).

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

| Expenses | | | 4,359,726 | | | | 5,067,380 | | | | 3,168,808 | | | (14)% |

| Revenues | | | 6,544,559 | | | | 5,545,818 | | | | 2,342,344 | | | 18% |

| Expenses | | | 5,188,066 | | | | 4,364,160 | | | | 1,751,850 | | | 19% |

| Revenues | | | 4,639,839 | | | | 4,206,297 | | | | 2,968,023 | | | 10% |

| Expenses | | | 3,029,105 | | | | 2,626,615 | | | | 1,736,044 | | | 15% |

Volumes were lower in 2022 as a result of softening overall demand and compared to strong volumes in the same period in 2021 from customers converting to air shipments due to ocean port congestion.

In 2022, demand for airfreight services softened compared to 2021 but rates remained high as available capacity was limited compared to pre-pandemic levels.

Airlines increased passenger flight schedules as restrictions were lifted which added available belly space throughout 2022.

Continued restrictions from the pandemic in China and other countries have resulted in airlines not increasing passenger flight schedules to pre-pandemic levels in certain lanes.

Additionally, capacity was further limited due to the conflict in Ukraine and the related route restrictions in Asia and Europe lanes and sanctions on Russian carriers.

In order to meet the transportation needs of our customers, we continued to purchase capacity in advance and on the spot market in the first half of the year.

Tonnage decreased in almost all regions due to softening demand, pandemic related lockdowns in China and downtime caused by the cyber-attack with the largest decrease coming from exports out of North Asia, South Asia and North America.

Though we continued to process air shipments on a limited basis during the downtime caused by the cyber-attack, our volumes were negatively affected.

Subsequent to the downtime in March, our volumes began to recover as customers gradually returned but were negatively affected through the second quarter.

Average sell and buy rates started declining in the second half of the year and accelerated in the fourth quarter as demand softened from an overall slowdown in the economy and as more cargo capacity on passenger flights became available.

Compared to the fourth quarter of 2021, airfreight services revenues and expenses decreased 47% and 48%, respectively, due to 38% and 37% decreases in average sell and buy rates, respectively, and a 20% decrease in tonnage compared to high demand for airfreight while capacity was constrained in particular on exports from North Asia in 2021.

Declines in tonnage and rates were most significant on export out of North Asia and South Asia.

As air carriers bring back additional flights, in some cases ahead of passenger demand, supply and demand imbalances may occur, resulting in further pressure on rates.

As experienced in the fourth quarter of 2022, these unprecedented disruptions improved as supply chain operations normalized.

Buy rates and sell rates have been declining since the second quarter of 2022 and are expected to further decline in 2023, which could result in further decrease in our revenues, expenses and operating income.

Ocean freight and ocean services revenues and expenses increased 18% and 19%, respectively, in 2022, as compared with 2021.

For the majority of the year, rising fuel prices, congestion at ports due to labor, truck and equipment shortages and disrupted sailing schedules resulted in continued high average buy rates in 2022.

As demand softened, port congestion cleared and shortages of labor and equipment at ports eased, resulting in available capacity from carriers that exceeded demand.

24.

The following chart shows revenues by geographic areas of responsibility for the years ended December 31, 2021, 2020 and 2019:

In accordance with our revenue recognition policy (see Note 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 of revenue at the destination.

North Asia's directly related cost of transportation and other expenses are higher than other segments due to the largely export nature of the operations in that region.

25.

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

The COVID-19 pandemic may continue to impact our business operations and financial operating results, and there is uncertainty in the nature and degree of its continued effects over time.

Refer to Risk Factors (Part I, Item 1A) for a discussion of these factors and other risks.

| | • | Revenues and directly related operating expenses increased 72% and 81%, respectively, from strong growth in all services propelled by high average rates and growth in volumes transacted. |

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

| | • | Severe imbalances between carrier available capacity and customer demand resulted in record high average buy and sell rates resulting in higher revenues, operating expenses and need for working capital to support the growth. |

| | • | Significant congestion at ocean ports and airport gateways from continued shortages in equipment, labor and warehousing space at destinations and disruptions from COVID-19 precautionary measures, resulted in longer transportation times and created challenging conditions to find availability to meet the growing customer demand. |

| | • | Salaries and related expenses increased 34% as a result of higher incentive compensation from higher operating income. |

On February 20, 2022, we determined that our company was the subject of a targeted cyber-attack.

The situation is evolving and while the Company has partially resumed operations, at this time the Company is unable to estimate when it will resume full operations.

We are incurring expenses relating to the cyber-attack to investigate and remediate this matter and expect to continue to incur expenses of this nature in the future.

At this early stage, the Company is unable to estimate the ultimate direct and indirect financial impacts of this cyber-attack.

In 2020, the United Kingdom and the European Union negotiated the terms of the United Kingdom’s exit from the European Union (Brexit), which were effective on January 1, 2021.

Prior to 2020, many ocean carriers incurred substantial operating losses and are highly leveraged with debt.

These conditions have resulted in multiple carrier acquisitions and carrier alliance formations and certain carriers are expanding into onshore services.

Carriers also face new regulatory requirements that became effective in 2020 requiring reductions in the sulfur in marine fuel, which are increasing their operating and capital costs.

The 2017 Tax Act significantly changed U.S. corporate income tax laws including, among other things, the creation of a territorial tax system.

implement tax reforms that would be expected to increase the total tax expense that we will incur in those locations.

| Expenses1 | | | 5,067,380 | | | | 3,168,808 | | | | 1,955,054 | | | 60% |

| Revenues1 | | | 5,545,818 | | | | 2,342,344 | | | | 2,188,149 | | | 137% |

| Expenses1 | | | 4,364,160 | | | | 1,751,850 | | | | 1,584,240 | | | 149% |

| Revenues1 | | | 4,206,297 | | | | 2,968,023 | | | | 3,013,330 | | | 42% |

| Expenses1 | | | 2,626,615 | | | | 1,736,044 | | | | 1,766,655 | | | 51% |

1 See Note 11 – Correction of Immaterial Errors to the consolidated financial statements included in Part II, Item 8 of this report.


In 2020 and 2021, airfreight services experienced unprecedented events in response to the global pandemic.

As a result of travel restrictions and lower passenger demand, airlines significantly reduced flight schedules which limited available belly space for cargo at a time where global demand remained high.

Demand started growing in the second quarter of 2020 and continued to remain high throughout 2021, amplified by a strong economy and customers converting to air shipments due to disruptions in ocean transportation, creating additional competition for limited available capacity.

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

In order to execute and meet the transportation needs of our customers we significantly increased utilization of chartered flights while still routinely purchasing capacity in advance and on the spot market.

This resulted in sustained high average buy and sell rates.

Freighters, charters and gateway infrastructure are operating at near maximum capacity, which is continuing the pressure on buy rates and limiting the ability to move additional volume.

Tonnage increased in all regions, with the largest increase coming from exports out of North America and North Asia, affected also by low levels of activity in the first half of 2020 in the United States and first quarter of 2020 in China as a result of pandemic-related closures.

During the fourth quarter of 2021, we experienced record high tonnage and continued high average sell rates and buy rates.

Compared to the fourth quarter of 2020, airfreight services revenues and expenses increased 68% and 65%, respectively, due to 53% and 49% increases in average sell and buy rates, respectively, and a 13% increase in tonnage.

All other things being equal, an average 10% weakening of the U.S. dollar, throughout the year ended December 31, [removed: 2021,] [added: 2022,] would have had the effect of raising operating income by approximately [removed: $120] [added: $94] 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: $98] [added: $77] million.

[added: Any such hedging activity] throughout the year ended December 31, [removed: 2021,] [added: 2022,] was insignificant.

Net foreign currency losses were approximately [removed: $12] [added: $2] million and [removed: $25] [added: $12] million in [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] respectively.

We had no foreign currency derivatives outstanding at December 31, [removed: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

As of December 31, [removed: 2021,] [added: 2022,] we had [removed: $237] [added: $73] million of net unsettled intercompany transactions.

At December 31, [removed: 2021,] [added: 2022,] we had cash and cash equivalents of [removed: $1,729] [added: $2,034] million, of which [removed: $487] [added: $995] million was invested at various short-term market interest rates.

We had no long-term debt at December 31, [removed: 2021.][added: 2022.]

A hypothetical change in the interest rate of 10 basis points at December 31, [removed: 2021] [added: 2022] 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: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

36.

37.

Any such hedging activity

33.

34.

[removed: | | • |] Airfreight Services [removed: |]

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

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

[removed: Airfreight Services:] [added: Airfreight Services:] Within airfreight, Expeditors typically acts either as a freight consolidator or as an agent for the airline that carries the shipment.

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

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

[removed: Ocean] [added: Ocean] Freight and Ocean [removed: Services:] [added: Services:] Within ocean services, Expeditors offers three basic services: ocean freight consolidation, direct ocean forwarding, and order management:

[removed: Ocean] [added: *Ocean] freight [removed: consolidation:] [added: consolidation*:] Expeditors, when acting as an ocean freight consolidator, contracts with ocean shipping carriers to obtain transportation for a fixed number of containers between various points during a specified time period at agreed-upon rates.

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

[removed: Customs] [added: Customs] Brokerage and Other [removed: Services:] [added: Services:] Expeditors offers a range of custom solutions, including:

[removed: Customs] [added: *Customs] Brokerage and Import [removed: Services:] [added: Services:*] Expeditors helps [removed: importers] [added: customers] clear shipments through customs by preparing [added: and filing] required documentation, [removed: calculating] [added: calculating,] and [removed: paying] [added: providing for payment of] duties and other taxes on behalf of the [removed: importer,] [added: customer as well as] arranging for any required inspections by governmental agencies, and import services such as arranging for local [removed: pickup,] [added: pick up,] storage and delivery at destinations.

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

[removed: Warehousing] [added: *Warehousing] and Distribution [removed: Services:] [added: Services:*] Expeditors’ services include inventory management, multi-channel order fulfillment, vendor management programs, and other value-added services.

[removed: Supply] [added: Supply] Chain Disruptions and Ongoing COVID-19 Impact on our [removed: Business][added: Business]

[removed: Cyber-Attack] [added: Cyber-Attack] Impact on our [removed: Business][added: Business]

We had limited ability to conduct operations [removed: during this time,] [added: for a period of approximately three weeks,] including but not limited to arranging for shipments of freight or managing customs and distribution activities for our customers’ shipments.

The following chart shows our [removed: 2021 and 2020] [added: 2022] revenues by service type:

[removed: ][added: ]

Expeditors has approximately [removed: 19,000] [added: 20,000] employees and provides a complete range of global logistics services to a diversified group of customers that vary in size, industry and geographic location.

[removed: | | • |] Americas (70) [removed: |]

[removed: | | • |] North Asia (21) [removed: |]

[removed: | | • |] South Asia (16) [removed: |]

[removed: | | • |] Europe (45) [removed: |]

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

Global consistency and compliance [removed: is] [added: are] fundamental to preserving our culture and network of people, processes, technology and locations.

[removed: | | 1. |] Ensuring that base-line strategies for air, ocean and customs services for every district office and region lead to growth at the relevant market rates, profits and volumes by services. [removed: |]

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

[removed: | | 4. |] Growing our customs brokerage offering [removed: in South] [added: throughout] Asia [removed: and India] by leveraging our strength and expertise in customs brokerage services and developing critical talent, processes and tools. [removed: |]

Airfreight services accounted for approximately [removed: 41%] [added: 35%] and [removed: 45%] [added: 41%] of Expeditors' total revenues in [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] respectively.

We estimate that our average airfreight consolidation weighs approximately [removed: 3,800] [added: 3,900] pounds and that a typical consolidation includes merchandise from several shippers.

[added: As a result, by aggregating shipments and presenting them] to an airline as a single shipment, we are able to obtain a lower rate per pound/kilo or cubic inch/centimeter than what is charged for an individual shipment, while generally offering the customer a lower rate than could be obtained directly from the airline for an unconsolidated shipment.

Many passenger air carriers [removed: remain highly leveraged] [added: continue to recover from significant cash flow challenges] and [removed: incurred] [added: record] operating losses [added: incurred] in [added: 2020 and] 2021.

Uncertainty over recovery of demand for [added: transpacific] passenger air travel compared to pre-pandemic levels and uncertainty related to jet fuel cost may impact air carriers’ operations and financial stability long term.

Changes in available capacity, periods of high [added: or low] demand, or other market disruptions has impacted and could continue to impact our buy and sell rates and challenge our ability to maintain historical unitary profitability.

Ocean freight services accounted for approximately [removed: 34%] [added: 38%] and [removed: 24%] [added: 34%] of Expeditors' total revenues in [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] 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: Direct] [added: *Direct] ocean [removed: forwarding:] [added: forwarding*:] When the customer contracts directly with the ocean carrier, EIO acts as an agent of the customer and derives its revenues from commissions paid by the ocean carrier and handling fees paid by the customer.

[removed: Order management:] [added: *Order management*:] Order management provides services that manage origin consolidation, supplier performance, carrier allocation, carrier performance, container management, document management, delivery management and Order/SKU visibility through our web-based portal.

Multiple carrier acquisitions and alliances have occurred, and certain carriers are entering into onshore services as they pursue scale and additional market share in an [added: effort to improve profitability.]

Demand for ocean transportation increased sharply in the second half of 2020 and remained strong [removed: in 2021,] [added: through the first half of 2022,] resulting in severe port congestion and supply chain disruptions, in particular on transpacific and Asia-to-Europe trade lanes.

In 2022, the COVID-19 pandemic, including the effect of ongoing quarantine requirements in China and resulting disruptions on supply chains continued to affect our business operations and financial results in particular in the first half of 2022.

As experienced in the fourth quarter of 2022, these unprecedented operating conditions dissipated as supply chains operations normalized.

In February 2022, we determined that our Company was the subject of a targeted cyber-attack which resulted in having to shut down most of our connectivity, operating and accounting systems globally to manage the safety of our entire global systems environment, and we initiated our cybersecurity incident response plan.

While we continued to navigate through the residual effects and incorporate learnings from the cyber-attack, our core systems were utilized to deliver our services from the second quarter and on.

We do not expect to have further material adverse impact on the Company’s business from this cyber-attack.

In 2022, we completed a review of our key strategic initiatives, which include:

1.

2.

3.

In the first half of 2022, as a result of limited availability in passenger aircraft capacity, we utilized chartered aircraft along with commercial capacity.

As air travel began to recover in 2022, along with lower demand for air cargo services, we reduced charter activity and anticipate low charter volumes in 2023.

Imbalances between available capacity and demand for transportation and port congestion started to ease in the second quarter of 2022.

Training, development and engagement programs that ensure that our employees understand and remain connected to Expeditors culture and strategic initiatives;

| | | | | |

| | | 2022 | | |

| | | | | |

| United States | | | 7,000 | |

| Europe | | | 4,200 | |

| Total | | | 19,900 | |

Historically, growth through aggressive acquisition has proven to be a challenge for many of our competitors and

We monitor climate-related risks and opportunities through our engagement with our customers and service providers and through our active participation in key initiatives and organizations focused on climate.

| | | | | |

Mr. Wall was appointed as President, Global Services, effective January 1, 2023.

Blake R.

Mr. Bell was elected to Regional Vice President in May 2014, and Senior Vice President of Global Transcon in October 2015.

On February 17, 2023, Mr. Bell was promoted as President, Global Products.

15.

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

The disruptions on supply chain and transportation continued to significantly affect our business operations and operating results in 2021.

Continued imbalances between demand and available capacity for all transportation modes have resulted in historically high average buy and sell rates in 2021 from already record high rates in 2020 and creates significant challenges for our network to meet our customers’ needs.

Continued congestion at ports and gateways and equipment and labor shortages have disrupted sailing schedules and limited the ability to increase capacity while demand grew from a rebounding economy.

We expect these disruptive market conditions to continue at least through the first half of 2022.

As discussed in more detail under “Results of Operations”, there are significant constraints on current capacity for both air freight and ocean freight.

This is due to a number of factors, including reduced flight schedules from pre-pandemic levels and new regulations, which limited available belly space for cargo, congestion at ports resulting from labor and equipment shortages and insufficient warehousing space at destinations.

Air freighters and charters, container ships and gateway infrastructure are operating at near maximum capacity.

While we believe these constraints are not long-term in nature, they impact our current ability to move increased air and ocean volumes in these capacity-constrained regions.

We are unable to predict how these uncertainties will affect our future operations or financial results, but these conditions could result in lower operating income.

In addition, in an effort to protect the health and safety of our employees, we continue to operate under our global business continuity plan that we implemented in the first quarter of 2020.

See Item 1A: “Risk Factors” below for additional details.

On February 20, 2022, we determined that our company was the subject of a targeted cyber-attack.

Upon discovering the incident, we shut down most of our operating systems globally to manage the safety of our overall global systems environment.

The situation is evolving and while the Company has partially resumed operations, at this time the Company is unable to estimate when it will resume full operations.

We are incurring expenses relating to the cyber-attack to investigate and remediate this matter and expect to continue to incur expenses of this nature in the future.

The Company expects that the impact of the shutdown and the ongoing impacts of the cyber-attack will have a material adverse impact on its business, revenues, expenses, results of operations, cash flows and reputation.

At this early stage, the Company is unable to estimate the ultimate direct and indirect financial impacts of this cyber-attack.

Our four key strategic initiatives are:

| | 3. | Continuing 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 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 brokerage infrastructure and our ability to provide local delivery and support services in China. |

In 2021, as a result of reduced availability in passenger aircraft capacity we greatly increased our usage of chartered aircraft.

We expect to continue to utilize chartered aircraft as long as international passenger flights remain insufficient to meet the demand for freight capacity.

As a result, by aggregating shipments and presenting them

Certain customers are increasingly utilizing airfreight to improve speed to market.

effort to improve profitability.

Currently, demand exceeds capacity in certain lanes.

To that end and true to our company culture, we have traditionally not laid off employees when we have encountered challenging downturns or economic uncertainty.

For example, in 2020 during the early stages of the pandemic, as we witnessed a rapid downturn in our industry, we adopted a “no lay off” policy because we knew business would come back at some point in the future and that we would need these employees to execute and grow our business.

In retrospect, we know it was the right thing to do for both our employees and our business as it allowed us to have experienced teams in place to operate during challenging supply chain conditions in 2021.

| | | 2021 | | |

| Europe | | | 3,930 | |

| Information Systems | | | 1,050 | |

| Corporate | | | 380 | |

| Total | | | 19,070 | |

percentages of an operating unit's revenues and operating income available to managers for distribution among key personnel.

authority where such license is required to perform these services.

Eugene K.

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

In June 2014, Mr. Alger was promoted to Executive Vice President - Global Services.

In August 2015, Mr. Alger was promoted to President, Global Services.

[removed: As of December 31, 2021, the] [added: In 2022,] amounts recorded for [removed: these] claims, lawsuits, government investigations and other legal matters are not significant to our operations, cash flows or financial position.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

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

For the fiscal year ended December 31, [removed: 2021][added: 2022]

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

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

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

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

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

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

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

[removed: (206) 674-3400][added: (206) 674-3400]

[removed: (Registrant’s] [added: (Registrant’s] telephone number, including area [removed: code)][added: code)]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

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

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

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: 2021,] [added: 2022,] was approximately [removed: $21,309,503,040.][added: $15,790,525,926.]

At [removed: March 8, 2022,] [added: February 24, 2023,] the number of shares outstanding of registrant’s Common Stock was [removed: 167,398,064.][added: 154,398,044.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the definitive proxy statement for the Registrant’s Annual Meeting of Shareholders to be held on May [removed: 3, 2022] [added: 2, 2023] are incorporated by reference into Part III of this Form 10-K.

| | Item 1A | [Risk [removed: Factors](#ITEM_1A_RISK_FACTORS)] [added: Factors](#item_1a_risk_factors)] | [removed: 15] [added: 16] |

| | Item 1B | [Unresolved Staff [removed: Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS)] [added: Comments](#item_1b_unresolved_staff_comments)] | [removed: 20] [added: 22] |

| | Item 2 | [removed: [Properties](#ITEM_2___Properties)] [added: [Properties](#item_2___properties)] | [removed: 20] [added: 22] |

| | Item 3 | [Legal [removed: Proceedings](#ITEM_3___Legal_Proceedings)] [added: Proceedings](#item_3___legal_proceedings)] | [removed: 20] [added: 22] |

| | Item 4 | [Mine Safety [removed: Disclosures](#ITEM_4___Mine_Safety_Disclosures)] [added: Disclosures](#item_4___mine_safety_disclosures)] | [removed: 20] [added: 22] |

| | Item 5 | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU)] [added: Securities](#item_5_market_for_registrants_common_equ)] | [removed: 20] [added: 23] |

| | Item 6 | [removed: [\[Reserved\]](#ITEM_6_RESERVED)] [added: [\[Reserved\]](#item_6_reserved)] | [removed: 23] [added: 25] |

| | Item 7 | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ITEM_7___Management_s_Discussion_and_Ana)] [added: Operations](#item_7___management_s_discussion_and_ana)] | [removed: 24] [added: 26] |

| | Item 7A | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#ITEM_7A_QUANTITATIVE_QUALITATIVE_DISCLOS)] [added: Risk](#item_7a_quantitative_qualitative_disclos)] | [removed: 33] [added: 36] |

| | Item 8 | [Financial Statements and Supplementary [removed: Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR)] [added: Data](#item_8_financial_statements_supplementar)] | [removed: 35] [added: 38] |

| | Item 9 | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC)] [added: Disclosure](#item_9_changes_in_disagreements_with_acc)] | [removed: 36] [added: 39] |

| | Item 9A | [Controls and [removed: Procedures](#ITEM_9A_CONTROLS_PROCEDURES)] [added: Procedures](#item_9a_controls_procedures)] | [removed: 36] [added: 39] |

| | Item 9B | [Other [removed: Information](#ITEM_9B_OR_INFORMATION)] [added: Information](#item_9b_or_information)] | [removed: 36] [added: 40] |

| | Item 9C | [Disclosures Regarding Foreign Jurisdictions That Prevent [removed: Inspections](#ITEM_9C_DISCLOSURE_REGARDING_FOREIGN_JUR)] [added: Inspections](#item_9c_disclosure_regarding_foreign_jur)] | [removed: 37] [added: 40] |

| | Item 10 | [Directors, Executive Officers and Corporate [removed: Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO)] [added: Governance](#item_10_directors_executive_ficers_corpo)] | [removed: 38] [added: 41] |

| | Item 11 | [Executive [removed: Compensation](#ITEM_11_EXECUTIVE_COMPENSATION)] [added: Compensation](#item_11_executive_compensation)] | [removed: 38] [added: 41] |

| | Item 12 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ITEM_12_SECURITY_OWNERSHIP_CERTAIN_BENEF)] [added: Matters](#item_12_security_ownership_certain_benef)] | [removed: 38] [added: 41] |

| | Item 13 | [Certain Relationships and Related Transactions and Director [removed: Independence](#ITEM_13_CERTAIN_RELATIONSHIPS_RELATED_TR)] [added: Independence](#item_13_certain_relationships_related_tr)] | [removed: 39] [added: 42] |

| | | |

| | | | | |

| | | | | |

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

For the Fiscal Year Ended December 31, 2022

| --- | --- |

We conduct operations in approximately [removed: 450] [added: 440] locations worldwide, of which approximately 100 are in the United States and [removed: 20] [added: 19] are owned.

22.

There were [removed: 623] [added: 600] registered holders of record as of [removed: March 8, 2022.][added: February 24, 2023.]

The Board of Directors last authorized repurchases [removed: down to 160] [added: from 150] million shares of common stock [removed: in November 2018.][added: down to 140 million on February 20, 2023.]

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: 12/31/2016] [added: 12/31/2017] and tracks it through [removed: 12/31/2021.][added: 12/31/2022.]

[removed: ][added: ]

[removed: The] [added: *The] stock price performance included in this graph is not necessarily indicative of future stock price [removed: performance.][added: performance.*]

| | | | | |

| June 15, 2022 | | $ | 0.67 | |

| December 15, 2022 | | $ | 0.67 | |

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

| October 1-31, 2022 | | | — | | | $ | — | | | | — | | | | 9,134,478 | |

| November 1-30, 2022 | | | 4,345,240 | | | $ | 113.00 | | | | 4,345,240 | | | | 4,901,190 | |

| December 1-31, 2022 | | | 654,760 | | | $ | 111.14 | | | | 654,760 | | | | 4,312,871 | |

| Total | | | 5,000,000 | | | $ | 112.76 | | | | 5,000,000 | | | | 4,312,871 | |

23.

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

| | | 12/17 | | | | 12/18 | | | | 12/19 | | | | 12/20 | | | | 12/21 | | | | 12/22 | | |

| Expeditors International of Washington, Inc. | | $ | 100.00 | | | | 106.52 | | | | 123.75 | | | | 152.77 | | | | 217.73 | | | | 170.51 | |

| Standard and Poor's 500 Index | | | 100.00 | | | | 95.61 | | | | 125.70 | | | | 148.81 | | | | 191.48 | | | | 156.77 | |

| NASDAQ Industrial Transportation (NQUSB502060T) | | | 100.00 | | | | 90.96 | | | | 114.55 | | | | 149.90 | | | | 189.54 | | | | 160.39 | |

24.

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

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

20.

| October 1-31, 2021 | | | — | | | $ | — | | | | — | | | | 9,404,267 | |

| November 1-30, 2021 | | | 1,834,385 | | | $ | 123.89 | | | | 1,834,385 | | | | 7,899,491 | |

| December 1-31, 2021 | | | 505,969 | | | $ | 123.08 | | | | 505,969 | | | | 7,210,353 | |

| Total | | | 2,340,354 | | | $ | 123.71 | | | | 2,340,354 | | | | 7,210,353 | |

21.

| | | 12/16 | | | | 12/17 | | | | 12/18 | | | | 12/19 | | | | 12/20 | | | | 12/21 | | |

| Expeditors International of Washington, Inc. | | $ | 100.00 | | | $ | 123.91 | | | $ | 131.99 | | | $ | 153.34 | | | $ | 189.30 | | | $ | 269.80 | |

| Standard and Poor's 500 Index | | | 100.00 | | | | 121.82 | | | | 116.47 | | | | 153.13 | | | | 181.29 | | | | 233.28 | |

| NASDAQ Industrial Transportation (NQUSB502060T) | | | 100.00 | | | | 127.55 | | | | 116.02 | | | | 146.11 | | | | 191.19 | | | | 241.77 | |

22.

Statements including those preceded by, followed by or that include the words or phrases “will”, likely result”, “are expected to”, "would expect", "would not expect", “will continue”, “is anticipated”, “estimate”, “project”, "provisional", "plan", "believe", "probable", "reasonably possible", "may", "could", "should", [added: "would",] "intends", "foreseeable future" or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

25.

23.

| | | | [Reports of Independent Registered Public Accounting [removed: Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC)] [added: Firm](#report_independent_registered_public_acc)] | | F-1 through [removed: F-3] [added: F-4] |

| | | | [Balance Sheets as of December 31, [removed: 2021] [added: 2022] and [removed: 2020](#CONSOLIDATED_BALANCE_SHEETS)] [added: 2021](#consolidated_balance_sheets)] | | [removed: F-4] [added: F-5] |

| | | | [Statements of Earnings for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATED_STATEMENTS_EARNINGS)] [added: 2020](#consolidated_statements_earnings)] | | [removed: F-5] [added: F-6] |

| | | | [Statements of Comprehensive Income for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] [added: 2020](#consolidated_statements_comprehensive_in)] | | [removed: F-6] [added: F-7] |

| | | | [Statements of Equity for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATED_STATEMENTS_EQUITY)] [added: 2020](#consolidated_statements_equity)] | | [removed: F-7] [added: F-8] |

| | | | [Statements of Cash Flows for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#Consolidated_Statements_of_Cash_Flows)] [added: 2020](#consolidated_statements_of_cash_flows)] | | [removed: F-8] [added: F-9] |

| | | | [Notes to Consolidated Financial [removed: Statements](#Notes_to_Consolidated_Financial_Statemen)] [added: Statements](#notes_to_consolidated_financial_statemen)] | | [removed: F-9] [added: F-10] through [removed: F-23] [added: F-24] |

| | | | | | |

38.

35.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were [added: not] effective as of [removed: the end of the period covered by this report at the reasonable assurance level.][added: December 31, 2022, due to a material weakness in internal control over financial reporting described below.]

[removed: There] [added: Except for the material weakness identified during the quarter, as of December 31, 2022, there] were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial [removed: reporting.][added: reporting other than related to the cyber-attack as discussed below.]

[removed: Starting] [added: With respect to the cyber-attack that is discussed in Note 11 to the consolidated financial statements in this report, starting] on February 20, 2022, [removed: as a result of a cyber-attack, the Company] [added: we] shut down most of [removed: its] [added: our] operating systems globally, including [removed: its] [added: our] accounting [removed: systems] [added: information systems,] to manage the safety of [removed: its] [added: our] entire global systems environment.

Management, including the Chief Executive Officer and Chief Financial Officer, [removed: conducted an assessment] [added: under the oversight] of [added: our Board of Directors, evaluated] the effectiveness of the Company's internal control over financial reporting, as of December 31, [removed: 2021,] [added: 2022,] based on the framework in [removed: *Internal] [added: Internal] Control — Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this [removed: assessment,] [added: material weakness, the Company’s] management [removed: has] concluded [removed: that, as of] [added: that at] December 31, [removed: 2021, our] [added: 2022, the Company’s] internal control over financial reporting was [added: not] 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: 2021,] [added: 2022,] which is included on page F-3.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In the fourth quarter of 2022, management identified a material weakness in internal control related to certain database changes made to an information technology (IT) system that supports the Company’s financial reporting processes.

A control to review and authorize direct changes to databases that support several key operational and accounting systems did not capture the complete population of database changes and, as such did not operate effectively as designed.

Management concluded that unauthorized database changes could have gone undetected, could have resulted in errors in the financial statements for the year ended 2022 and could have had a direct or indirect impact on financial reporting controls, as there were no alternate information technology general control (ITGC) or processes operating at a sufficient level of precision that would have timely detected improper -- database changes.

Management believes that this control deficiency was a result of IT control processes lacking sufficient precision to support the successful operation of this ITGC and was overly dependent upon interpretation, knowledge and actions of certain individuals with IT expertise performing the control.

The material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results.

39.

Remediation

Subsequent to the identification of the material weakness and prior to the issuance of these financial statements on Form 10-K, the Company (i) performed a lookback review of all direct changes made to the database subject to the control operating ineffectiveness for the full year 2022 and (ii) conducted supplemental procedures and found no evidence of improper changes or changes with direct or consequential impact on internal controls over financial reporting.

As a result of identifying this issue management will be implementing certain enhancements designed to strengthen IT program change management processes and will continue to conduct monthly supplemental lookback review procedures of direct database changes until improvements are fully in place.

We expect that such enhancements will be completed prior to the end of 2023.

We engaged third-party cybersecurity experts to investigate and assist in the remediation.

Our Board of Directors was regularly apprised of, and directors with experience in cybersecurity participated in, the critical investigation and remediation activities.

Subsequently, we restored and strengthened the security of our systems and networks and enhanced the continuous monitoring of the entire information security environment.

Additionally, we have continued to implement various improvements to our network and processes to mitigate the risk of recurrence and severity of such incidents in the future.

During the disruption caused by the cyber-attack, we deployed interim procedures and controls to maintain our systems of internal control over financial reporting.

As a result of this cyber-attack and based on information known at this date, management determined that our disclosure controls and procedures were effective and the cyber-attack did not materially affect, nor was it reasonably likely to affect the effectiveness of the Company’s internal control over financial reporting.

We are bringing our enterprise systems online and are expecting to implement enhancements to our existing cybersecurity systems and processes beginning in the first quarter of 2022.

36.

40.

37.

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: 3, 2022.][added: 2, 2023.]

The members of the Audit Committee are [removed: Robert P.][added: Brandon S.]

[removed: Pelletier] [added: Dubois,] and Olivia D.

Expeditors' Board has determined that [removed: Robert P.][added: Brandon S.]

Pedersen, [added: Chair of the Audit Committee,] and Olivia D.

Pedersen, James M.

Carlile, James M.

Dubois, Brandon S.

Pedersen, Liane J.

Carlile, Chairman of the Audit Committee, Brandon S.

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: 3, 2022.][added: 2, 2023.]

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: 3, 2022.][added: 2, 2023.]

The following table provides information as of December 31, [removed: 2021,] [added: 2022,] regarding compensation plans under which equity securities of Expeditors are authorized for issuance.

[removed: | (1) |] Represents shares issuable upon exercise of outstanding stock options, vesting of outstanding restricted stock units and performance stock units that will vest if target levels are achieved under the Omnibus Incentive Plan. [removed: |]

[removed: | (2) |] The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding restricted stock units and performance stock units, which have no exercise price. [removed: |]

[removed: | (3) |] Includes [removed: 1,782,334] [added: 1,131,713] available for issuance under the employee stock purchase plans and [removed: 2,566,988] [added: 2,040,825] available for future grants of equity awards under the Amended and Restated 2017 Omnibus Incentive Plan. [removed: |]

41.

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

| Equity Compensation Plans Approved by Security Holders | | | 2,861,347 | | | $ | 44.86 | | | | 3,172,538 | |

| Total | | | 2,861,347 | | | $ | 44.86 | | | | 3,172,538 | |

(1)

(2)

(3)

| Equity Compensation Plans Approved by Security Holders | | | 3,592,463 | | | $ | 44.07 | | | | 4,349,322 | |

| Total | | | 3,592,463 | | | $ | 44.07 | | | | 4,349,322 | |

| --- | --- |

38.

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: 3, 2022.][added: 2, 2023.]

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: 3, 2022.][added: 2, 2023.]

42.

39.

| | | [Reports of Independent Registered Public Accounting [removed: Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC)] [added: Firm](#report_independent_registered_public_acc)] | | F-1 through [removed: F-3] [added: F-4] |

| | | [Consolidated Balance Sheets as of December 31, [removed: 2021] [added: 2022] and [removed: 2020](#CONSOLIDATED_BALANCE_SHEETS)] [added: 2021](#consolidated_balance_sheets)] | | [removed: F-4] [added: F-5] |

| | | [Consolidated Statements of Earnings for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATED_STATEMENTS_EARNINGS)] [added: 2020](#consolidated_statements_earnings)] | | [removed: F-5] [added: F-6] |

| | | [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATED_STATEMENTS_COMPREHENSIVE_IN)] [added: 2020](#consolidated_statements_comprehensive_in)] | | [removed: F-6] [added: F-7] |

| | | [Consolidated Statements of Equity for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATED_STATEMENTS_EQUITY)] [added: 2020](#consolidated_statements_equity)] | | [removed: F-7] [added: F-8] |

| | | [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#Consolidated_Statements_of_Cash_Flows)] [added: 2020](#consolidated_statements_of_cash_flows)] | | [removed: F-8] [added: F-9] |

| | | [Notes to Consolidated Financial [removed: Statements](#Notes_to_Consolidated_Financial_Statemen)] [added: Statements](#notes_to_consolidated_financial_statemen)] | | [removed: F-9] [added: F-10] through [removed: F-23] [added: F-24] |

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

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

[removed: | | (3) |] General Form of Executive Employment Agreement. [removed: See Exhibit 10.27. |]

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

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

[removed: | | (7) |] Expeditors' [removed: 2011] [added: 2012] Stock Option Plan. [removed: See Exhibit 10.57. |]

[removed: | | (8) |] Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2011] [added: 2012] Stock Option Plan. [removed: See Exhibit 10.58. |]

[removed: | | (9) |] Expeditors' [removed: 2012] [added: 2013] Stock Option Plan. [removed: See Exhibit 10.59. |]

[removed: | | (10) |] Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2012] [added: 2013] Stock Option Plan. [removed: See Exhibit 10.60. |]

[removed: | | (11) |] Expeditors' [removed: 2013] [added: 2014] Stock Option Plan. [removed: See Exhibit 10.61. |]

[removed: | | (12) |] Form of Stock Option Agreement used in connection with options granted under [removed: Expeditors' 2013] [added: Expeditors; 2014] Stock Option Plan. [removed: See Exhibit 10.62. |]

[removed: | | (13) |] Expeditors' [removed: 2014] [added: 2015] Stock Option Plan. [removed: See Exhibit 10.63. |]

[removed: | | (14) |] Form of Stock Option Agreement used in connection with options granted under [removed: Expeditors; 2014] [added: Expeditors' 2015] Stock Option Plan. [removed: See Exhibit 10.64. |]

[removed: | | (15) |] Expeditors' [removed: 2015] [added: 2016] Stock Option Plan. [removed: See Exhibit 10.65. |]

[removed: | | (16) |] Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2015] [added: 2016] Stock Option Plan. [removed: See Exhibit 10.66. |]

[removed: | | (19) |] Expeditors' Amended and Restated 2017 Omnibus Incentive Plan. [removed: See Exhibit 10.69 |]

[removed: | | (20) |] Form of Executive Restricted Stock Unit Award Agreement used in connection with executive restricted stock units granted under Expeditors' Amended and Restated 2017 Omnibus Incentive Stock Plan. [removed: See Exhibit 10.69 |]

[removed: | | (21) |] Form of Performance Share Award Agreement used in connection with performance share units granted under Expeditors' Amended and Restated 2017 Omnibus Incentive Stock Plan. [removed: See Exhibit 10.69 |]

| [added: [10.72](https://www.sec.gov/Archives/edgar/data/746515/000156459019029862/expd-ex1072_182.htm)] | [removed: (22)] | Form of Performance Share Award Agreement used in connection with performance share units granted under Expeditors' Amended and Restated 2017 Omnibus Incentive [removed: Stock] Plan. [removed: See] [added: (Incorporated by reference to] Exhibit [removed: 10.69] [added: 10.72 to Form 10-Q filed on or about August 7, 2019.)] |

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

| [removed: [3.1](http://www.sec.gov/Archives/edgar/data/746515/000074651518000004/a201710-kex31.htm)] [added: [3.1](https://www.sec.gov/Archives/edgar/data/746515/000074651518000004/a201710-kex31.htm)] | | Expeditors' Restated Articles of Incorporation and the Articles of Amendment as amended. (Incorporated by reference to Exhibit 3.1 to Form 10-K, filed on or about February 23, 2018.) |

| [removed: [3.2](http://www.sec.gov/Archives/edgar/data/746515/000156459020036140/expd-ex32_32.htm)] [added: [3.2](https://www.sec.gov/Archives/edgar/data/746515/000156459022037207/expd-ex32_21.htm)] | | Expeditors' Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 to Form 8-K, filed on or about [removed: August 4, 2020.)] [added: November 9, 2022.)] |

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

| [removed: [10.23](http://www.sec.gov/Archives/edgar/data/746515/000074651515000004/a201410-kex1023.htm)] [added: [10.23](https://www.sec.gov/Archives/edgar/data/746515/000074651515000004/a201410-kex1023.htm)] | | Form of Employment Agreement executed by Jeffrey S. Musser, Expeditors' President and Chief Executive Officer dated December 31, 2008. (Incorporated by reference to Exhibit 10.23 to Form 10-K, filed on or about February 26, 2015.) |

| [removed: [10.25](http://www.sec.gov/Archives/edgar/data/746515/000119312509040947/dex1025.htm)] [added: [10.25](https://www.sec.gov/Archives/edgar/data/746515/000119312509040947/dex1025.htm)] | | Form of Employment Agreement executed by Expeditors' Chief Financial Officer dated December 31, 2008. (Incorporated by reference to Exhibit 10.25 to Form 10-K, filed on or about February 27, 2009.) |

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

| [removed: [10.35](http://www.sec.gov/Archives/edgar/data/746515/000104746908003213/a2183955zdef14a.htm#toc_he78401_1)] [added: [10.35](https://www.sec.gov/Archives/edgar/data/746515/000104746908003213/a2183955zdef14a.htm#toc_he78401_1)] | | Expeditors' 2008 Executive Incentive Compensation Plan. (Incorporated by reference to Appendix C of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 21, 2008.) |

| [removed: [10.42](http://www.sec.gov/Archives/edgar/data/746515/000074651519000009/a2019def14a.htm#s887bef6947b0445bac08527e1ccf618a)] [added: [10.42](https://www.sec.gov/Archives/edgar/data/746515/000074651519000009/a2019def14a.htm#s887bef6947b0445bac08527e1ccf618a)] | | Expeditors' Amended and Restated 2002 Employee Stock Purchase 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 27, 2019.) |

| [removed: [10.57](http://www.sec.gov/Archives/edgar/data/746515/000119312511071194/ddef14a.htm)] [added: [10.59](https://www.sec.gov/Archives/edgar/data/746515/000074651512000008/a2012def14a.htm)] | | Expeditors' [removed: 2011] [added: 2012] 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 [removed: 18, 2011.)] [added: 20, 2012.)] |

| [removed: [10.58](http://www.sec.gov/Archives/edgar/data/746515/000119312511071194/ddef14a.htm)] [added: [10.60](https://www.sec.gov/Archives/edgar/data/746515/000074651512000008/a2012def14a.htm)] | | Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2011] [added: 2012] Stock Option Plan. (Incorporated by reference to Appendix B of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March [removed: 18, 2011.)] [added: 20, 2012.)] |

| [removed: [10.59](http://www.sec.gov/Archives/edgar/data/746515/000074651512000008/a2012def14a.htm)] [added: [10.61](https://www.sec.gov/Archives/edgar/data/746515/000074651513000008/a2013def14a.htm)] | | Expeditors' [removed: 2012] [added: 2013] 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 [removed: 20, 2012.)] [added: 29, 2013.)] |

| [removed: [10.60](http://www.sec.gov/Archives/edgar/data/746515/000074651512000008/a2012def14a.htm)] [added: [10.62](https://www.sec.gov/Archives/edgar/data/746515/000074651513000008/a2013def14a.htm)] | | Form of Stock Option Agreement used in connection with options granted under Expeditors' [removed: 2012] [added: 2013] Stock Option Plan. (Incorporated by reference to Appendix B of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March [removed: 20, 2012.)] [added: 29, 2013.)] |

| [removed: [10.61](http://www.sec.gov/Archives/edgar/data/746515/000074651513000008/a2013def14a.htm)] [added: [10.63](https://www.sec.gov/Archives/edgar/data/746515/000074651514000006/a2014def14a.htm)] | | Expeditors' [removed: 2013] [added: 2014] 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 [removed: 29, 2013.)] [added: 21, 2014.)] |

| | | | | |

(1)

Form of Employment Agreement executed by Jeffrey S.

See Exhibit 10.23.

(2)

See Exhibit 10.25.

(3)

See Exhibit 10.27.

(4)

See Exhibit 10.35.

(5)

See Exhibit 10.42.

(6)

See Exhibit 10.59.

(7)

See Exhibit 10.60.

(8)

See Exhibit 10.61.

(9)

See Exhibit 10.62.

(10)

See Exhibit 10.63.

(11)

See Exhibit 10.64.

(12)

See Exhibit 10.65.

(13)

See Exhibit 10.66.

(14)

See Exhibit 10.67.

(15)

See Exhibit 10.68.

(16)

See Exhibit 10.69

(17)

See Exhibit 10.70

(18)

See Exhibit 10.72

43.

(b)

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

| | (17) | Expeditors' 2016 Stock Option Plan. See Exhibit 10.67. |

| | (18) | Form of Stock Option Agreement used in connection with options granted under Expeditors' 2016 Stock Option Plan. See Exhibit 10.68. |

40.

| --- | --- |

| | | |

41.

| [10.68](http://www.sec.gov/Archives/edgar/data/746515/000119312516516424/d100140ddef14a.htm#tx100140_41) | | Form of Stock Option Agreement used in connection with options granted under Expeditors' 2016 Stock Option Plan. (Incorporated by reference to Appendix B of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 24, 2016.) |

| [10.69](http://www.sec.gov/Archives/edgar/data/746515/000156459020012523/expd-def14a_20200505.htm) | | Expeditors' Amended and Restated 2017 Omnibus Incentive Plan. (Incorporated by reference to Appendix B of Expeditors' Notice of Annual Meeting of Shareholders and Proxy Statement pursuant to Regulation 14A filed on or about March 24, 2020.) |

| [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' Amended and Restated 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' Amended and Restated 2017 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.72 to Form 10-Q filed on or about August 7, 2019.) |

Date: March [removed: 15, 2022][added: 1, 2023]

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 [removed: March 14, 2022.][added: February 28, 2023.]

| [removed: Signature] [added: Signature] | | [removed: Title] [added: Title] |

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

YEARS ENDED DECEMBER 31, [added: 2022,] 2021, [removed: 2020,] AND [removed: 2019][added: 2020]

[removed: Opinion] [added: *Opinion] on the Consolidated Financial [removed: Statements][added: Statements*]

We have audited the accompanying consolidated balance sheets of Expeditors International of Washington, Inc. and subsidiaries (the Company) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] 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: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] based on criteria established in Internal [removed: Control] [added: *Control] – Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March [removed: 15, 2022] [added: 1, 2023] expressed an [removed: unqualified] [added: adverse] opinion on the effectiveness of the Company’s internal control over financial reporting.

[removed: Basis] [added: *Basis] for [removed: Opinion][added: Opinion*]

[removed: Critical] [added: *Critical] Audit [removed: Matter][added: Matter*]

[removed: Assessment] [added: *Assessment] of gross unrecognized tax [removed: benefits][added: benefits*]

[removed: | | • |] evaluating the Company’s interpretation of tax laws, [removed: |]

[removed: | | • |] assessing transfer pricing positions for compliance with applicable laws and regulations, [removed: |]

[removed: | | • |] inspecting settlement documents with applicable taxing authorities and appeals documents with applicable tax courts, [removed: |]

[removed: | | • |] assessing the expiration of statutes of limitations, [removed: |]

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

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

| [removed: March 15,] [added: |] 2022 | [added: | | | | | | | | | | | |]

[removed: Opinion] [added: *Opinion] on Internal Control Over Financial [removed: Reporting][added: Reporting*]

We have audited Expeditors International of Washington, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in [removed: Internal] [added: *Internal] Control – Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, [added: because of] the [removed: Company maintained, in all] [added: effect of the] material [removed: respects,] [added: weakness, described below, on the achievement of the objectives of the control criteria, the Company has not maintained] effective internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in [removed: Internal] [added: *Internal] Control – Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] 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: 2021,] [added: 2022,] and the related notes (collectively, the consolidated financial statements), and our report dated March [removed: 15, 2022] [added: 1, 2023] expressed an unqualified opinion on those consolidated financial statements.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control [removed: Over] [added: over] Financial [removed: Reporting.][added: Reporting (Item 9A).]

[removed: Definition] [added: *Definition] and Limitations of Internal Control Over Financial [removed: Reporting][added: Reporting*]

| December 31, | | [removed: 2021] [added: 2022] | | | | [removed: 2020] [added: 2021] | | |

| [removed: Assets:] [added: Assets:] | | | | | | | | |

| Cash and cash equivalents [added: at beginning of period] | | [removed: $] | 1,728,692 | | | [removed: $] | 1,527,791 | | [added: | | 1,230,491 | |]

| Accounts receivable, net | | | [removed: 3,810,286] [added: 2,107,645] | | | | [removed: 1,998,055] [added: 3,810,286] | |

| Deferred contract costs | | | [removed: 987,266] [added: 257,545] | | | | [removed: 327,448] [added: 987,266] | |

| Other | | | [removed: 108,801] [added: 118,696] | | | | [removed: 110,250] [added: 108,801] | |

| Total current assets | | | [removed: 6,635,045] [added: 4,518,017] | | | | [removed: 3,963,544] [added: 6,635,045] | |

| Property and equipment, net | | | [removed: 487,870] [added: 501,916] | | | | [removed: 506,425] [added: 487,870] | |

| Operating lease right-of-use assets | | | [removed: 459,158] [added: 507,503] | | | | [removed: 432,723] [added: 459,158] | |

| Deferred federal and state income taxes, net | | | [removed: 729] [added: 37,449] | | | | [removed: —] [added: 729] | |

| Other assets, net | | | [removed: 19,200] [added: 17,622] | | | | [removed: 16,884] [added: 19,200] | |

| Total assets | | $ | [removed: 7,609,929] [added: 5,590,434] | | | $ | [removed: 4,927,503] [added: 7,609,929] | |

| [removed: Liabilities:] [added: Liabilities:] | | | | | | | | |

| Accounts payable | | $ | [removed: 2,012,461] [added: 1,108,996] | | | $ | [removed: 1,136,859] [added: 2,012,461] | |

| Accrued expenses, primarily salaries and related costs | | | [removed: 403,625] [added: 479,262] | | | | [removed: 257,021] [added: 403,625] | |

45.

| | | | |

46.

47.

| |

| March 1, 2023 |

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

A material weakness in internal control related to certain database changes made to an information technology (IT) system that supports the Company’s financial reporting process has been identified and included in management’s assessment.

A control to review and authorize direct changes to databases that support several key operational and accounting systems did not capture the complete population of database changes and, as such did not operate effectively as designed.

Management concluded that unauthorized database changes could have gone undetected, could have resulted in errors in the financial statements for the year ended 2022 and could have had a direct or indirect impact on financial reporting controls, as there were no alternate ITGC controls or processes operating at a sufficient level of precision that would have timely detected improper database changes.

The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

*Basis for Opinion*

| |

| March 1, 2023 |

| | | | | | | | | |

| Cash and cash equivalents | | $ | 2,034,131 | | | $ | 1,728,692 | |

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

| Interest expense | | | (23,277 | ) | | | (411 | ) | | | (219 | ) |

| Other, net | | | 9,243 | | | | 6,894 | | | | 5,931 | |

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

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

| Shares repurchased under provisions of stock repurchase plan | | | (14,529 | ) | | | (145 | ) | | | (130,212 | ) | | | (1,451,551 | ) | | | — | | | | (1,581,908 | ) | | | — | | | | (1,581,908 | ) |

| Net earnings | | | — | | | | — | | | | — | | | | 1,357,399 | | | | — | | | | 1,357,399 | | | | 3,206 | | | | 1,360,605 | |

| Dividends and dividend equivalents paid ($1.34) | | | — | | | | — | | | | 1,165 | | | | (214,964 | ) | | | — | | | | (213,799 | ) | | | — | | | | (213,799 | ) |

| Distribution to noncontrolling interest | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1,945 | ) | | | (1,945 | ) |

| Balance at December 31, 2022 | | | 154,313 | | | $ | 1,543 | | | $ | 139 | | | $ | 3,310,892 | | | $ | (202,553 | ) | | $ | 3,110,021 | | | $ | 3,514 | | | $ | 3,113,535 | |

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

| Net earnings | | $ | 1,360,605 | | | $ | 1,418,845 | | | $ | 698,214 | |

| Depreciation and amortization | | | 57,338 | | | | 51,312 | | | | 56,959 | |

| Payments from borrowing on lines of credit | | | (30,289 | ) | | | (2,551 | ) | | | (214 | ) |

| | | | |

Each performance obligation is comprised of one or more of the Company’s services.

The Company uses a two-step approach to recognizing and measuring uncertain income tax positions (tax contingencies).

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including resolution of related appeals or litigation processes.

The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.

The Company considers many factors when evaluating its tax positions and estimating our tax benefits, which may require periodic adjustments and which may not match the ultimate future outcome.

The Company recognizes stock compensation expense based on the fair value of awards granted to employees and directors under the Company’s Amended and Restated 2017 Omnibus Plan and employee stock purchase rights plans.

See Note 11 for further information on estimates related to the cyber-attack.

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

| | Time deposits and money market funds | | | 17,341 | | | | 17,341 | | | | 63,866 | | | | 63,866 | |

42.

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

| (Robert R. Wright) | | |

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

43.

44.

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

| Reclassification adjustment for foreign currency realized losses, net of tax of $145 in 2019 | | | — | | | | — | | | | 535 | |

| Balance at December 31, 2018 | | | 171,582 | | | $ | 1,716 | | | $ | 1,896 | | | $ | 2,088,707 | | | $ | (105,481 | ) | | $ | 1,986,838 | | | $ | 882 | | | $ | 1,987,720 | |

| Shares repurchased under provisions of stock repurchase plan | | | (5,337 | ) | | | (54 | ) | | | (202,176 | ) | | | (186,830 | ) | | | — | | | | (389,060 | ) | | | — | | | | (389,060 | ) |

| Net earnings | | | — | | | | — | | | | — | | | | 590,395 | | | | — | | | | 590,395 | | | | 1,621 | | | | 592,016 | |

| Dividends paid ($1.00) | | | — | | | | — | | | | 403 | | | | (170,956 | ) | | | — | | | | (170,553 | ) | | | — | | | | (170,553 | ) |

| Cash and cash equivalents at beginning of period | | | 1,527,791 | | | | 1,230,491 | | | | 923,735 | |

| --- | --- |

See Note 11 for further information.

The Tax Cuts and Jobs Act (2017 Tax Act) significantly changed U.S. corporate income tax laws, including among other things, the creation of a territorial tax system.

The Company recognizes stock compensation expense based on the fair value of awards at the grant date.

Certain costs are allocated

| | Time deposits | | | 63,866 | | | | 63,866 | | | | 53,392 | | | | 53,392 | |

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

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

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

| | 2023 | | | 89,583 | |

| | 2024 | | | 73,346 | |

| | 2025 | | | 66,112 | |

| | 2026 | | | 51,708 | |

| | Thereafter | | | 153,090 | |

| | Lease liability | | $ | 467,660 | |

The Company had a Non-Discretionary Stock Repurchase Plan, originally approved by the Board of Directors in November 1993, under which management was authorized to repurchase up to 40,000 shares of the Company’s common stock in the open market with the proceeds received from the exercise of employee stock options and the Employee Stock Purchase Plan.

Since March 31, 2019, all shares authorized under this plan have been repurchased and no further shares are available for future repurchases.

Cumulative shares repurchased since inception of the plans were 122,969.

| | Outstanding at December 31, 2020 | | | 965 | | | $ | 73.92 | |

| | RSUs granted | | | 327 | | | $ | 113.82 | |

| | RSUs vested | | | (477 | ) | | $ | 74.16 | |

| | Outstanding at December 31, 2020 | | | 3,553 | | | $ | 44.49 | | | | | | | | | |

| | Options exercised | | | (1,220 | ) | | $ | 45.28 | | | | | | | | | |

| | Options forfeited | | | — | | | $ | — | | | | | | | | | |

| | Exercisable at December 31, 2021 | | | 2,329 | | | $ | 44.07 | | | | 2.95 | | | $ | 210,128 | |

| | 2019 | | | | | | | | | | | | |

| | Basic earnings attributable to shareholders | | $ | 590,395 | | | | 170,899 | | | $ | 3.45 | |