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

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

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

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

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

At August ~~3, 2020,~~2, 2021, the number of shares outstanding of the issuer’s common stock was ~~167,659,204.~~169,891,158.

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents	$	1,180,455		$	1,230,491		$	1,674,121		$	1,527,791
Accounts receivable, less allowance for credit loss of $5,347 at June 30, 2020 and $11,143 at December 31, 2019		1,460,324			1,315,091
Accounts receivable, less allowance for credit loss of $6,104 at June 30, 2021 and $5,579 at December 31, 2020								2,647,516			1,998,055
Deferred contract costs		147,932			131,783			534,692			327,448
Other		69,560			92,558			128,933			110,250
Total current assets		2,858,271			2,769,923			4,985,262			3,963,544
Property and equipment, less accumulated depreciation and amortization of $494,773 at June 30, 2020 and $478,906 at December 31, 2019		497,762			499,344
Property and equipment, less accumulated depreciation and amortization of $534,790 at June 30, 2021 and $516,988 at December 31, 2020								499,282			506,425
Operating lease right-of-use assets		424,516			390,035			443,708			432,723
Goodwill		7,927			7,927			7,927			7,927
Deferred federal and state income taxes, net		5,300			8,034
Other assets, net		16,401			16,621			16,992			16,884
Total assets	$	3,810,177		$	3,691,884		$	5,953,171		$	4,927,503
Liabilities:
Current Liabilities:
Accounts payable	$	755,971		$	735,695		$	1,408,572		$	1,136,859
Accrued expenses, primarily salaries and related costs		257,923			189,446			319,696			257,021
Contract liabilities		172,148			154,183			619,140			379,722
Current portion of operating lease liabilities		69,740			65,367			80,210			74,004
Federal, state and foreign income taxes		32,287			23,627			57,608			45,437
Total current liabilities		1,288,069			1,168,318			2,485,226			1,893,043
Noncurrent portion of operating lease liabilities		360,510			326,347			370,333			364,185
Deferred federal and state income taxes, net								13,961			7,048
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, NaN issued		—		—				0			0
Common stock, par value $0.01 per share. Issued and outstanding: 166,816 shares at June 30, 2020 and 169,622 shares at December 31, 2019		1,668			1,696
Common stock, par value $0.01 per share. Issued and outstanding: 169,169 shares at June 30, 2021 and 169,294 shares at December 31, 2020								1,692			1,693
Additional paid-in capital		12,221			3,203			79,357			157,496
Retained earnings		2,298,387			2,321,316			3,104,471			2,600,201
Accumulated other comprehensive loss		(153,158	)		(131,187	)		(106,066	)		(99,753	)
Total shareholders’ equity		2,159,118			2,195,028			3,079,454			2,659,637
Noncontrolling interest		2,480			2,191			4,197			3,590
Total equity		2,161,598			2,197,219			3,083,651			2,663,227
Total liabilities and equity	$	3,810,177		$	3,691,884		$	5,953,171		$	4,927,503

	Three months ended June 30,				Six months ended June 30,				Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Revenues:
Airfreight services	$	1,434,590	$	741,577	$	2,143,629	$	1,456,478	$	1,523,569	$	1,269,654	$	2,849,484	$	1,925,252
Ocean freight and ocean services		491,712		543,809		985,139		1,112,450		1,098,550		489,385		2,052,462		980,725
Customs brokerage and other services		654,330		750,193		1,353,728		1,486,702		986,974		652,039		1,905,967		1,348,868
Total revenues		2,580,632		2,035,579		4,482,496		4,055,630		3,609,093		2,411,078		6,807,913		4,254,845
Operating Expenses:
Airfreight services		1,097,073		542,639		1,617,242		1,051,849		1,136,328		932,137		2,090,872		1,398,865
Ocean freight and ocean services		363,599		390,299		730,082		810,630		862,251		361,272		1,604,686		725,668
Customs brokerage and other services		370,369		440,946		770,445		877,342		600,054		368,078		1,150,359		765,585
Salaries and related		395,107		356,351		737,147		713,261		481,186		395,107		933,291		737,147
Rent and occupancy		41,375		40,897		83,899		82,420		45,366		41,375		90,646		83,899
Depreciation and amortization		14,109		12,677		26,769		26,070		12,675		14,109		25,662		26,769
Selling and promotion		3,113		11,643		11,356		22,719		3,172		3,113		6,242		11,356
Other		48,261		47,926		98,875		91,537		57,416		48,261		109,995		98,875
Total operating expenses		2,333,006		1,843,378		4,075,815		3,675,828		3,198,448		2,163,452		6,011,753		3,848,164
Operating income		247,626		192,201		406,681		379,802		410,645		247,626		796,160		406,681
Other Income (Expense):
Interest income		2,559		6,516		7,366		12,622		2,188		2,559		4,134		7,366
Other, net		797		2,262		4,181		3,927		2,649		797		5,649		4,181
Other income, net		3,356		8,778		11,547		16,549		4,837		3,356		9,783		11,547
Earnings before income taxes		250,982		200,979		418,228		396,351		415,482		250,982		805,943		418,228
Income tax expense		66,794		47,449		111,258		102,710		98,508		66,794		201,019		111,258
Net earnings		184,188		153,530		306,970		293,641		316,974		184,188		604,924		306,970
Less net earnings attributable to the noncontrolling interest		319		381		757		793		602		319		1,332		757
Net earnings attributable to shareholders	$	183,869	$	153,149	$	306,213	$	292,848	$	316,372	$	183,869	$	603,592	$	306,213
Diluted earnings attributable to shareholders per share	$	1.09	$	0.88	$	1.80	$	1.67	$	1.84	$	1.09	$	3.52	$	1.80
Basic earnings attributable to shareholders per share	$	1.10	$	0.90	$	1.83	$	1.71	$	1.87	$	1.10	$	3.57	$	1.83
Weighted average diluted shares outstanding		169,290		174,466		170,382		174,953		171,677		169,290		171,660		170,382
Weighted average basic shares outstanding		166,767		171,003		167,751		171,425		169,210		166,767		169,140		167,751

	Three months ended June 30,					Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
	2020		2019			2020			2019		2021		2020		2021			2020
Net earnings	$	184,188	$	153,530		$	306,970		$	293,641	$	316,974	$	184,188	$	604,924		$	306,970
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax (benefit) expense of $(5,148) and $(82) for the three months ended June 30, 2020 and 2019 and $(3,974) and $439 for the six months ended June 30, 2020 and 2019		16,410		(769	)		(22,439	)		596
Reclassification adjustments for foreign currency realized losses, net of tax of $145 for the three and six months ended June 30, 2019		—		535			—			535
Foreign currency translation adjustments, net of income taxes expense (benefit) of $221 and $(5,148) for the three months ended June 30, 2021 and 2020 and $(3,172) and $(3,974) for the six months ended June 30, 2021 and 2020.												9,159		16,410		(7,038	)		(22,439	)
Other comprehensive income (loss)		16,410		(234	)		(22,439	)		1,131		9,159		16,410		(7,038	)		(22,439	)
Comprehensive income		200,598		153,296			284,531			294,772		326,133		200,598		597,886			284,531
Less comprehensive income attributable to the noncontrolling interest		141		257			289			539		341		141		607			289
Comprehensive income attributable to shareholders	$	200,457	$	153,039		$	284,242		$	294,233	$	325,792	$	200,457	$	597,279		$	284,242

	Three months ended June 30,						Six months ended June 30,						Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Operating Activities:
Net earnings	$	184,188		$	153,530		$	306,970		$	293,641		$	316,974		$	184,188		$	604,924		$	306,970
Adjustments to reconcile net earnings to net cash from operating activities:
Provisions for losses (recoveries) on accounts receivable		2,389			1,584			4,209			(304	)
Provisions for losses on accounts receivable														1,090			2,389			2,289			4,209
Deferred income tax expense		9,287			3,697			4,148			5,805			1,850			9,287			10,001			4,148
Stock compensation expense		21,638			23,824			32,794			37,206			30,909			21,638			42,094			32,794
Depreciation and amortization		14,109			12,677			26,769			26,070			12,675			14,109			25,662			26,769
Other, net		118			(29	)		551			160			346			118			897			551
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(185,055	)		(28,187	)		(168,375	)		202,290
Increase (decrease) in accounts payable and accrued expenses		106,760			39,900			107,677			(82,383	)
(Increase) decrease in deferred contract costs		(2,333	)		(13,010	)		(18,401	)		18,249
(Decrease) increase in contract liabilities		(595	)		13,003			20,606			(23,722	)
Increase (decrease) in income taxes payable, net		20,154			(49,606	)		30,642			(32,613	)
Increase in accounts receivable														(410,783	)		(185,055	)		(663,697	)		(168,375	)
Increase in accounts payable and accrued expenses														100,118			106,760			333,271			107,677
Increase in deferred contract costs														(150,382	)		(2,333	)		(221,640	)		(18,401	)
Increase (decrease) in contract liabilities														174,504			(595	)		254,094			20,606
(Decrease) increase in income taxes payable, net														(47,994	)		20,154			(1,356	)		30,642
Decrease (increase) in other, net		16,061			(1,676	)		4,131			791			1,164			16,061			(324	)		4,131
Net cash from operating activities		186,721			155,707			351,721			445,190			30,471			186,721			386,215			351,721
Investing Activities:
Purchase of property and equipment		(22,114	)		(12,987	)		(28,241	)		(22,422	)		(6,539	)		(22,114	)		(14,930	)		(28,241	)
Other, net		(68	)		1,038			(211	)		1,293			138			(68	)		104			(211	)
Net cash from investing activities		(22,182	)		(11,949	)		(28,452	)		(21,129	)		(6,401	)		(22,182	)		(14,826	)		(28,452	)
Financing Activities:
Proceeds from issuance of common stock		29,187			32,287			52,586			59,477			22,711			29,187			42,468			52,586
Repurchases of common stock		(30,985	)		(190,589	)		(314,225	)		(234,923	)		(62,472	)		(30,985	)		(148,469	)		(314,225	)
Dividends Paid		(86,815	)		(85,184	)		(86,815	)		(85,184	)
Dividends paid														(98,387	)		(86,815	)		(98,387	)		(86,815	)
Payments for taxes related to net share settlement of equity awards		(9,170	)		(6,674	)		(10,566	)		(6,674	)		(13,893	)		(9,170	)		(15,168	)		(10,566	)
Net cash from financing activities		(97,783	)		(250,160	)		(359,020	)		(267,304	)		(152,041	)		(97,783	)		(219,556	)		(359,020	)
Effect of exchange rate changes on cash and cash equivalents		1,726			(377	)		(14,285	)		2,158			8,699			1,726			(5,503	)		(14,285	)
Change in cash and cash equivalents		68,482			(106,779	)		(50,036	)		158,915			(119,272	)		68,482			146,330			(50,036	)
Cash and cash equivalents at beginning of period		1,111,973			1,189,429			1,230,491			923,735			1,793,393			1,111,973			1,527,791			1,230,491
Cash and cash equivalents at end of period	$	1,180,455		$	1,082,650		$	1,180,455		$	1,082,650		$	1,674,121		$	1,180,455		$	1,674,121		$	1,180,455
Taxes Paid:
Income taxes	$	38,504		$	97,715		$	73,808		$	134,968		$	143,959		$	38,504		$	190,536		$	73,808

	Common Stock																								Common Stock
For the three months ended June 30, 2020 and 2019	Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
For the three months ended June 30, 2021 and 2020																									Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at March 31, 2021																										168,808		$	1,688		$	101,269		$	2,887,323		$	(115,486	)	$	2,874,794		$	3,856		$	2,878,650
Shares issued under employee stock plans																										861			9			8,809			—			—			8,818			—			8,818
Shares repurchased under provisions of stock repurchase plan																										(500	)		(5	)		(62,467	)		—			—			(62,472	)		—			(62,472	)
Stock compensation expense																										—			—			30,909			—			—			30,909			—			30,909
Net earnings																										—			—			—			316,372			—			316,372			602			316,974
Other comprehensive income (loss)																										—			—			—			—			9,420			9,420			(261	)		9,159
Dividends paid ($0.58)																										—			—			837			(99,224	)		—			(98,387	)		—			(98,387	)
Balance at June 30, 2021																										169,169		$	1,692		$	79,357		$	3,104,471		$	(106,066	)	$	3,079,454		$	4,197		$	3,083,651

Balance at March 31, 2020		166,193		$	1,662		$	682		$	2,202,208		$	(169,746	)	$	2,034,806		$	2,339		$	2,037,145			166,193		$	1,662		$	682		$	2,202,208		$	(169,746	)	$	2,034,806		$	2,339		$	2,037,145
Shares issued under employee stock plans		1,023			10			20,007			—			—			20,017			—			20,017			1,023			10			20,007			—			—			20,017			—			20,017
Shares repurchased under provisions of stock repurchase plan		(400	)		(4	)		(30,981	)		—			—			(30,985	)		—			(30,985	)		(400	)		(4	)		(30,981	)		—			—			(30,985	)		—			(30,985	)
Stock compensation expense		—			—			21,638			—			—			21,638			—			21,638			—			—			21,638			—			—			21,638			—			21,638
Net earnings		—			—			—			183,869			—			183,869			319			184,188			—			—			—			183,869			—			183,869			319			184,188
Other comprehensive income (loss)		—			—			—			—			16,588			16,588			(178	)		16,410			—			—			—			—			16,588			16,588			(178	)		16,410
Dividends paid ($0.52)		—			—			875			(87,690	)		—			(86,815	)		—			(86,815	)		—			—			875			(87,690	)		—			(86,815	)		—			(86,815	)
Balance at June 30, 2020		166,816		$	1,668		$	12,221		$	2,298,387		$	(153,158	)	$	2,159,118		$	2,480		$	2,161,598			166,816		$	1,668		$	12,221		$	2,298,387		$	(153,158	)	$	2,159,118		$	2,480		$	2,161,598

Balance at March 31, 2019		171,648		$	1,716		$	3,978		$	2,222,562		$	(103,986	)	$	2,124,270		$	1,164		$	2,125,434
																									Common Stock
For the six months ended June 30, 2021 and 2020																									Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at December 31, 2020																										169,294		$	1,693		$	157,496		$	2,600,201		$	(99,753	)	$	2,659,637		$	3,590		$	2,663,227
Shares issued under employee stock plans		1,002			11			25,602			—			—			25,613			—			25,613			1,300			13			27,287			—			—			27,300			—			27,300
Shares repurchased under provisions of stock repurchase plans		(2,610	)		(26	)		(41,374	)		(149,189	)		—			(190,589	)		—			(190,589	)		(1,425	)		(14	)		(148,455	)		—			—			(148,469	)		—			(148,469	)
Stock compensation expense		—			—			23,824			—			—			23,824			—			23,824			—			—			42,094			—			—			42,094			—			42,094
Net earnings		—			—			—			153,149			—			153,149			381			153,530			—			—			—			603,592			—			603,592			1,332			604,924
Other comprehensive income (loss)		—			—			—			—			(110	)		(110	)		(124	)		(234	)		—			—			—			—			(6,313	)		(6,313	)		(725	)		(7,038	)
Dividends paid ($0.50)		—			—			403			(85,587	)		—			(85,184	)		—			(85,184	)
Balance at June 30, 2019		170,040		$	1,701		$	12,433		$	2,140,935		$	(104,096	)	$	2,050,973		$	1,421		$	2,052,394
Dividends paid ($0.58)																										—			—			935			(99,322	)		—			(98,387	)		—			(98,387	)
Balance at June 30, 2021																										169,169		$	1,692		$	79,357		$	3,104,471		$	(106,066	)	$	3,079,454		$	4,197		$	3,083,651


	Common Stock
For the six months ended June 30, 2020 and 2019	Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at December 31, 2019		169,622		$	1,696		$	3,203		$	2,321,316		$	(131,187	)	$	2,195,028		$	2,191		$	2,197,219			169,622		$	1,696		$	3,203		$	2,321,316		$	(131,187	)	$	2,195,028		$	2,191		$	2,197,219
Cumulative effect of accounting change		—			—			—			6,074			—			6,074			—			6,074			—			—			—			6,074			—			6,074			—			6,074
Shares issued under employee stock plans		1,594			16			42,004			—			—			42,020			—			42,020			1,594			16			42,004			—			—			42,020			—			42,020
Shares repurchased under provisions of stock repurchase plans		(4,400	)		(44	)		(66,780	)		(247,401	)		—			(314,225	)		—			(314,225	)		(4,400	)		(44	)		(66,780	)		(247,401	)		—			(314,225	)		—			(314,225	)
Stock compensation expense		—			—			32,794			—			—			32,794			—			32,794			—			—			32,794			—			—			32,794			—			32,794
Net earnings		—			—			—			306,213			—			306,213			757			306,970			—			—			—			306,213			—			306,213			757			306,970
Other comprehensive income (loss)		—			—			—			—			(21,971	)		(21,971	)		(468	)		(22,439	)		—			—			—			—			(21,971	)		(21,971	)		(468	)		(22,439	)
Dividends paid ($0.52)		—			—			1,000			(87,815	)		—			(86,815	)		—			(86,815	)		—			—			1,000			(87,815	)		—			(86,815	)		—			(86,815	)
Balance at June 30, 2020		166,816		$	1,668		$	12,221		$	2,298,387		$	(153,158	)	$	2,159,118		$	2,480		$	2,161,598			166,816		$	1,668		$	12,221		$	2,298,387		$	(153,158	)	$	2,159,118		$	2,480		$	2,161,598

Balance at December 31, 2018		171,582		$	1,716		$	1,896		$	2,088,707		$	(105,481	)	$	1,986,838		$	882		$	1,987,720
Shares issued under employee stock plans		1,656			17			52,786			—			—			52,803			—			52,803
Shares repurchased under provisions of stock repurchase plans		(3,198	)		(32	)		(79,858	)		(155,033	)		—			(234,923	)		—			(234,923	)
Stock compensation expense		—			—			37,206			—			—			37,206			—			37,206
Net earnings		—			—			—			292,848			—			292,848			793			293,641
Other comprehensive income (loss)		—			—			—			—			1,385			1,385			(254	)		1,131
Dividends paid ($0.50)		—			—			403			(85,587	)		—			(85,184	)		—			(85,184	)
Balance at June 30, 2019		170,040		$	1,701		$	12,433		$	2,140,935		$	(104,096	)	$	2,050,973		$	1,421		$	2,052,394

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

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

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

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

The Company typically satisfies its performance obligations as services are rendered over time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed over the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one to two month-period and contracts with customers have an original expected duration of less than one year. The Company satisfied nearly all performance obligations for the contract liabilities recorded as of March 31, ~~2020.~~2021.

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

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

Effective January 1, 2020, the Company adopted a new accounting standard update related to the measurement of credit losses on financial instruments. The adoption had an immaterial effect on the Company’s consolidated financial statements and disclosures. Under this new standard, the valuation allowance reduces a financial asset’s balance for credit losses expected to be incurred over the assets contractual term. The Company determined that this new guidance is applicable to its accounts receivable, which are short term and for which the Company has not historically experienced significant credit losses. The Company adopted this standard using the modified retrospective transition method resulting in a ~~$6 millionadjustment to the opening balance of retained earnings and an $8 million reduction to the opening balance of allowance for credit loss.~~ The Company’s trade accounts receivable present similar credit risk characteristics and the allowance for credit loss is estimated on a collective basis, using a credit loss-rate method leveraging historical credit loss information and including considerations of the current economic environment. Additional allowances may be necessary in the future if changes in economic conditions are ~~significant~~significant enough to affect expected credit losses. The Company has recorded an allowance for credit loss in the amounts of $~~5,347~~6,104 as of June 30, ~~2020~~2021 and ~~$11,143~~$5,579 as of December 31, ~~2019.~~2020. Additions and write-offs have not been significant in the periods presented.

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

In December 2019, the FASB issued an ASU, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also clarifies and amends existing guidance to improve consistent application among reporting entities. This standard will become effective for the Company on January 1, 2021. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

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

In the second quarter of ~~2020~~2021 and ~~2019,~~2020, the Company awarded ~~459~~307 and ~~462~~459 restricted stock units (RSUs), respectively. The RSUs were granted at a weighted-average fair value of $113.82 in 2021 and $72.90 in ~~2020 and $75.73 in 2019.~~2020. The RSUs vest annually over 3 years based on continued employment and are settled upon vesting in shares of the Company's common stock on a 1-for-1 basis. The value of an RSU award is based on the Company's stock price on the date of grant. Additionally, in the second quarter of 2021 and 2020, 13 and ~~2019,~~ 19 ~~and 24~~ fully vested RSUs were granted to non-employee directors, ~~respectfully.~~respectively.

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

The grant of employee stock purchase rights and the issuance of shares under the employee stock purchase plan are made in the third quarter of each fiscal year. NaN shares were issued ~~under the employee stock purchase plan~~ in the three and six months ended June 30, 2021 and 2020, ~~and 2019.~~respectively.

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

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

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

The Company’s consolidated effective income tax rate was ~~26.6%~~23.7% and 24.9%, respectively, for the three and six months ended June 30, ~~2020,~~2021 as compared to ~~23.6% and 25.9%~~26.6% for ~~the~~both comparable periods in ~~2019.~~2020. The three and six months ended June 30, 2021, effective tax rate benefited from increased tax deductions related to share-based compensation and a favorable adjustment to the deferred tax liability required for unremitted foreign earnings when compared to the same periods in 2020. The effect of higher average tax rates ofrelated to our international subsidiaries, when compared to U.S. federal and state tax rates, were partially offset by U.S. foreign tax credits and U.S. income tax deductions for Foreign-derived intangible income (FDII). ~~Additionally, the three months ended June 30, 2019 benefited from a state income tax refund.~~

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

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

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

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

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

	Six months ended June 30,						Three months ended June 30,
	Net earnings attributable to shareholders		Weighted average shares		Earnings per share		Net earnings attributable to shareholders		Weighted average shares		Earnings per share
2021
Basic earnings attributable to shareholders							$	316,372		169,210	$	1.87
Effect of dilutive potential common shares								—		2,467		—
Diluted earnings attributable to shareholders							$	316,372		171,677	$	1.84
2020
Basic earnings attributable to shareholders	$	306,213		167,751	$	1.83	$	183,869		166,767	$	1.10
Effect of dilutive potential common shares		—		2,631		—		—		2,523		—
Diluted earnings attributable to shareholders	$	306,213		170,382	$	1.80	$	183,869		169,290	$	1.09
2019

							Six months ended June 30,
							Net earnings attributable to shareholders		Weighted average shares		Earnings per share
2021
Basic earnings attributable to shareholders	$	292,848		171,425	$	1.71	$	603,592		169,140	$	3.57
Effect of dilutive potential common shares		—		3,528		—		—		2,520		—
Diluted earnings attributable to shareholders	$	292,848		174,953	$	1.67	$	603,592		171,660	$	3.52
2020
Basic earnings attributable to shareholders							$	306,213		167,751	$	1.83
Effect of dilutive potential common shares								—		2,631		—
Diluted earnings attributable to shareholders							$	306,213		170,382	$	1.80

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

The Company has a Discretionary Stock Repurchase Plan approved by the Board of Directors that authorizes management to reduce issued and outstanding common stock down to 160,000 shares. During the six months ended June 30, ~~2020, 4,400~~2021, 1,425 shares were repurchased at an average price of $~~71.41~~104.20 per share, compared to ~~3,110~~4,400 shares at an average price of ~~$73.45~~$71.41 per share during the same period in ~~2019. In the first quarter of 2019, the Company also repurchased 88 shares at an average price of $74.03 under a Non-discretionary Stock Repurchase Plan that expired in 2019.~~2020.

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

On May 4, 2021, the Board of Directors declared a semi-annual dividend of $0.58 per share payable on June 15, 2021 to shareholders of record as of June 1, 2021. On May 5, 2020, the Board of Directors declared a semi-annual dividend of $0.52 per share payable on June 15, 2020 to shareholders of record as of June 1, 2020. ~~On May 7, 2019, the Board of Directors declared a semi-annual dividend of $0.50 per share payable on June 17, 2019 to shareholders of record as of June 3, 2019.~~

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

	June 30, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Cash and Cash Equivalents:
Cash and overnight deposits	$	576,740	$	576,740	$	417,456	$	417,456	$	761,806	$	761,806	$	602,112	$	602,112
Corporate commercial paper		562,706		562,722		775,504		776,356		845,471		845,527		872,287		872,350
Time deposits		41,009		41,009		37,531		37,531		66,844		66,844		53,392		53,392
Total cash and cash equivalents	$	1,180,455	$	1,180,471	$	1,230,491	$	1,231,343	$	1,674,121	$	1,674,177	$	1,527,791	$	1,527,854

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

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

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

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

UNITED
STATES

OTHER
NORTH
AMERICA

LATIN
AMERICA

NORTH
ASIA

SOUTH
ASIA

EUROPE

MIDDLE
EAST,
AFRICA
AND
INDIA

ELIMI-
NATIONS

CONSOLI-
DATED

For the three months ended June 30, 2020:

Revenues¹

$
639,231

74,314

37,553

1,117,058

224,313

387,430

101,611

(878
)

2,580,632

Directly related cost of transportation and
other expenses²

$
354,624

41,449

22,701

907,915

160,355

271,540

72,908

(451
)

1,831,041

Salaries and other operating expenses³

$
207,703

25,283

12,112

97,171

39,184

95,757

25,188

(433
)

501,965

Operating income

$
76,904

7,582

2,740

111,972

24,774

20,133

3,515

6

247,626

Identifiable assets at period end

$
1,886,463

170,873

72,912

669,335

213,007

581,988

221,381

(5,782
)

3,810,177

Capital expenditures

$
19,076

1,148

216

385

182

993

114

—

22,114

Equity

$
1,399,124

71,165

29,758

306,022

108,777

168,060

116,279

(37,587
)

2,161,598

For the three months ended June 30, 2019:

Revenues¹

$
681,076

85,537

38,757

621,951

181,380

319,331

108,311

(764
)

2,035,579

Directly related cost of transportation and
other expenses²

$
386,093

50,336

22,043

487,554

132,487

220,676

75,089

(394
)

1,373,884

Salaries and other operating expenses³

$
207,060

26,343

14,368

69,944

33,380

89,340

29,423

(364
)

469,494

Operating income

$
87,923

8,858

2,346

64,453

15,513

9,315

3,799

(6
)

192,201

Identifiable assets at period end

$
1,819,718

176,151

73,197

580,311

193,771

581,518

229,692

(7,368
)

3,646,990

Capital expenditures

$
8,985

768

145

300

428

1,914

447

—

12,987

Equity

$
1,303,381

83,417

31,014

282,192

107,229

168,570

109,790

(33,199
)

2,052,394

	UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED		UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the six months ended June 30, 2020:
Revenues¹	$	1,289,638		156,145		75,443		1,655,013		393,355		708,070		206,650		(1,818	)		4,482,496
Directly related cost of transportation and other expenses²	$	728,585		87,339		46,466		1,333,216		281,637		493,538		147,884		(896	)		3,117,769
Salaries and other operating expenses³	$	433,647		48,995		23,861		154,604		69,092		177,611		51,138		(902	)		958,046
For the three months ended June 30, 2021:
Revenues																				$	997,567		101,465		46,981		1,309,382		417,718		544,949		192,186		(1,155	)		3,609,093
Directly related cost of transportation and other expenses¹																				$	566,882		59,311		25,952		1,086,641		335,219		376,856		148,290		(518	)		2,598,633
Salaries and other operating expenses²																				$	241,121		31,300		14,735		106,812		49,046		123,408		34,026		(633	)		599,815
Operating income	$	127,406		19,811		5,116		167,193		42,626		36,921		7,628		(20	)		406,681	$	189,564		10,854		6,294		115,929		33,453		44,685		9,870		(4	)		410,645
Identifiable assets at period end	$	1,886,463		170,873		72,912		669,335		213,007		581,988		221,381		(5,782	)		3,810,177	$	2,972,363		196,558		102,296		1,114,475		377,370		929,706		291,406		(31,003	)		5,953,171
Capital expenditures	$	23,573		1,209		318		710		370		1,638		423		—			28,241	$	2,905		64		72		400		532		2,100		466		—			6,539
Equity	$	1,399,124		71,165		29,758		306,022		108,777		168,060		116,279		(37,587	)		2,161,598	$	2,163,114		80,802		36,316		318,111		146,583		255,006		128,148		(44,429	)		3,083,651
For the six months ended June 30, 2019:
Revenues¹	$	1,340,859		176,947		72,936		1,254,804		358,559		632,021		220,986		(1,482	)		4,055,630
Directly related cost of transportation and other expenses²	$	753,448		106,576		41,158		986,200		262,298		436,571		154,592		(1,022	)		2,739,821
Salaries and other operating expenses³	$	425,475		50,553		26,796		138,371		64,841		172,183		58,234		(446	)		936,007
For the three months ended June 30, 2020:
Revenues																				$	639,226		73,679		37,553		984,715		217,152		358,060		101,571		(878	)		2,411,078
Directly related cost of transportation and other expenses¹																				$	354,619		40,814		22,701		775,572		153,194		242,170		72,868		(451	)		1,661,487
Salaries and other operating expenses²																				$	207,703		25,283		12,112		97,171		39,184		95,757		25,188		(433	)		501,965
Operating income	$	161,936		19,818		4,982		130,233		31,420		23,267		8,160		(14	)		379,802	$	76,904		7,582		2,740		111,972		24,774		20,133		3,515		6			247,626
Identifiable assets at period end	$	1,819,718		176,151		73,197		580,311		193,771		581,518		229,692		(7,368	)		3,646,990	$	1,886,463		170,873		72,912		669,335		213,007		581,988		221,381		(5,782	)		3,810,177
Capital expenditures	$	15,900		996		238		644		604		2,896		1,144		—			22,422	$	19,076		1,148		216		385		182		993		114		—			22,114
Equity	$	1,303,381		83,417		31,014		282,192		107,229		168,570		109,790		(33,199	)		2,052,394	$	1,399,124		71,165		29,758		306,022		108,777		168,060		116,279		(37,587	)		2,161,598


																				UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the six months ended June 30, 2021:
Revenues																				$	1,872,957		195,582		91,845		2,518,430		767,484		1,011,282		352,692		(2,359	)		6,807,913
Directly related cost of transportation and other expenses¹																				$	1,069,517		112,361		52,652		2,054,170		605,163		683,765		269,399		(1,110	)		4,845,917
Salaries and other operating expenses2																				$	479,819		57,037		27,112		213,732		92,211		232,863		64,301		(1,239	)		1,165,836
Operating income																				$	323,621		26,184		12,081		250,528		70,110		94,654		18,992		(10	)		796,160
Identifiable assets at period end																				$	2,972,363		196,558		102,296		1,114,475		377,370		929,706		291,406		(31,003	)		5,953,171
Capital expenditures																				$	5,930		186		125		757		1,111		5,654		1,167		—			14,930
Equity																				$	2,163,114		80,802		36,316		318,111		146,583		255,006		128,148		(44,429	)		3,083,651
For the six months ended June 30, 2020:
Revenues																				$	1,289,631		154,910		75,444		1,481,872		383,233		665,020		206,553		(1,818	)		4,254,845
Directly related cost of transportation and other expenses¹																				$	728,578		86,104		46,467		1,160,075		271,515		450,488		147,787		(896	)		2,890,118
Salaries and other operating expenses2																				$	433,647		48,995		23,861		154,604		69,092		177,611		51,138		(902	)		958,046
Operating income																				$	127,406		19,811		5,116		167,193		42,626		36,921		7,628		(20	)		406,681
Identifiable assets at period end																				$	1,886,463		170,873		72,912		669,335		213,007		581,988		221,381		(5,782	)		3,810,177
Capital expenditures																				$	23,573		1,209		318		710		370		1,638		423		—			28,241
Equity																				$	1,399,124		71,165		29,758		306,022		108,777		168,060		116,279		(37,587	)		2,161,598

The Company’s consolidated financial results in the ~~first~~three and ~~second quarter~~six months ended June 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic ~~and are expected to be further impacted~~ in ~~the remainder of 2020. The impact is affecting the Company’s geographical segments unevenly.~~

divergent ways. In the first and second quarter of ~~2020,~~2021, the Company experienced strong volumes and high average sell and buy rates as a result of imbalances between demand and carrier capacity and continuing effects of disruptions in supply chains originating in measures to combat the pandemic in 2020.

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

These impacts are affecting all of the ~~second quarter~~Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. For the three months ended June 30, 2021 and 2020, ~~and 2019,~~ the People's Republic of China, including Hong Kong, represented ~~37%~~29% and ~~26%~~34%, respectively, of the Company’s total revenues and ~~38%~~22% and ~~28%~~38%, respectively, of the ~~Company’s~~ total operating income.

~~This is in contrast with slower activity in North Asia in~~ For the ~~first quarter of~~six months ended June 30, 2021 and 2020, as the global pandemic resulted in temporary closures and limited operations from the Company’s China offices and shipments that were rerouted or delayed by customers and service providers taking their own precautionary measures. In the first half of 2020 and 2019, the People's Republic of China, including Hong Kong, represented ~~31% and 26%, respectively,~~29% of the Company’s total revenues and ~~33%~~24% and ~~28%~~33%, respectively, of the ~~Company’s~~ total operating income.

Beginning in the first quarter 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. These errors do not affect any of the metrics used to calculate or evaluate management’s compensation and had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and are presented on a comparable basis.

The below tables present the effect of the correction for the following periods:

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

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

Certain portions of this report on Form 10-Q including the sections entitled "Overview,~~" "Novel Coronavirus (COVID-19),~~" "Expeditors' Culture and Strategy," "International Trade and Competition," "Seasonality," "Critical Accounting Estimates," "Results of Operations," "Income tax expense," "Currency and Other Risk Factors" and "Liquidity and Capital Resources" contain forward-looking statements. Words such as "will likely result," "expects", "are expected to," "would expect," "would not expect," "will continue," "is anticipated," "estimate," "project," "plan," "believe," "probable," "reasonably possible," "may," "could," "should," "intends," "foreseeable future" and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, our anticipated growth and trends in the Company's businesses, the anticipated impact and duration of ~~COVID-19,~~Novel Coronavirus (COVID-19) pandemic, and other characterizations of future events or circumstances are forward-looking statements. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These statements must be considered in connection with the discussion of the important factors that could cause actual results to differ materially from the forward-looking statements. ~~In addition to risk factors identified in Part II, Item 1A, Risk Factors of this report, attention~~Attention should be given to the risk factors identified and discussed in Part I, Item 1A in the Company's annual report on Form 10-K filed on February ~~21, 2020.~~19, 2021. Management believes that these forward-looking statements are reasonable as of this filing date and we do not assume any obligations to update these statements except as required by law.

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

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

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

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

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

In these transactions, we evaluate whether it is appropriate to record the gross or net amount as revenue. Generally, revenue is recorded on a gross basis when we are primarily responsible for fulfilling the promise to provide the services, when we assume risk of loss, when we have discretion in setting the prices for the services to the customers, and we have the ability to direct the use of the services provided by the third party. When revenue is recorded on a net basis, the amounts earned are determined using a fixed fee, a per unit of activity fee or a combination thereof. For revenues earned in other capacities, for instance, when we do not issue a HAWB, a HOBL or a House Seaway Bill or otherwise act solely as an agent for the shipper, only the commissions and fees earned for such services are included in revenues. In these transactions, we are not a principal and report only commissions and fees earned in revenue.

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

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

The mix of services varies by segment based primarily on the import or export orientation of local operations in each of our regions. In accordance with our revenue recognition policy (see Note 1.B to the condensed consolidated financial statements in this report) freight revenue and related expenses are recorded by the office that performs the transportation service. Shipment profits are split between origin and destination offices by recording a commission fee or profit share of revenue at the destination.

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

~~These uncertain conditions continued in July 2020, and we expect them to continue at least through the remainder of the year. A prolonged recession~~ in the ~~global economy and trade would negatively affect~~first quarter of 2020. See Part I, Item 1A: “Risk Factors” in our ~~operations in~~annual report on Form 10-K for the ~~future.~~year ended December 31, 2020 as updated herein under Part II Item 1A for additional details.

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

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

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

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

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

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

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

We operate in over 60 countries in the competitive global logistics industry and our activities are closely tied to the global economy. The global economy entered into a recession as a result of the global pandemic and related precautionary measures including lockdown government mandates worldwide, shutdown of manufacturing and operations for non-essential businesses and travel restrictions. International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, laws and policies relating to tariffs, trade restrictions, foreign investments and taxation. Periodically, governments consider a variety of changes to tariffs and trade restrictions and accords. Currently, the United States and China have significantly increased tariffs on certain imports and are engaged in trade negotiations and changes to export regulations and ~~tariffs for goods deemed essential to combating COVID-19. The~~tariffs. In 2020, the United Kingdom and the European Union ~~are negotiating~~negotiated the terms of the United Kingdom's exit from the European ~~Union.~~Union (Brexit), which were effective on January 1, 2021. We cannot predict the outcome of ~~these proposals~~changes in tariffs, or ~~negotiations, or~~interpretations, and trade restrictions and accords and the effects they will have on our business. As governments implement higher tariffs on imports, manufacturers may accelerate, to the extent possible, shipments to avoid higher tariffs and, over time, may shift manufacturing to other countries. The pandemic’s significant impact on supply chains along with other geo-political considerations may also drive manufacturers to relocate their operations or make changes to how they manage their supply chains and inventories in order to reduce their exposure to such disruptions in the future. Doing business in foreign locations also subjects us to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being influenced by governmental policies and inter-governmental disputes concerning international trade, our business may also be negatively affected by political developments and changes in government personnel or policies in the United States and other countries, as well as economic turbulence, political unrest and security concerns in the nations and on the trade shipping lanes in which we conduct business and the future impact that these events may have on international trade, oil prices and security costs.

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

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

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

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

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

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

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

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

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

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

	Three months ended June 30,					Six months ended June 30,					Three months ended June 30,					Six months ended June 30,
(in thousands)	2020		2019		Percentage change	2020		2019		Percentage change	2021		2020		Percentage change	2021		2020		Percentage change
Airfreight services:
Revenues	$	1,434,590	$	741,577	93%	$	2,143,629	$	1,456,478	47%
Expenses		1,097,073		542,639	102		1,617,242		1,051,849	54
Revenues¹											$	1,523,569	$	1,269,654	20%	$	2,849,484	$	1,925,252	48%
Expenses¹												1,136,328		932,137	22		2,090,872		1,398,865	49
Ocean freight services and ocean services:
Revenues		491,712		543,809	(10)		985,139		1,112,450	(11)
Expenses		363,599		390,299	(7)		730,082		810,630	(10)
Revenues¹												1,098,550		489,385	124		2,052,462		980,725	109
Expenses¹												862,251		361,272	139		1,604,686		725,668	121
Customs brokerage and other services:
Revenues		654,330		750,193	(13)		1,353,728		1,486,702	(9)
Expenses		370,369		440,946	(16)		770,445		877,342	(12)
Revenues¹												986,974		652,039	51		1,905,967		1,348,868	41
Expenses¹												600,054		368,078	63		1,150,359		765,585	50
Overhead expenses:
Salaries and related costs		395,107		356,351	11		737,147		713,261	3		481,186		395,107	22		933,291		737,147	27
Other		106,858		113,143	(6)		220,899		222,746	(1)		118,629		106,858	11		232,545		220,899	5
Total overhead expenses		501,965		469,494	7		958,046		936,007	2		599,815		501,965	19		1,165,836		958,046	22
Operating income		247,626		192,201	29		406,681		379,802	7		410,645		247,626	66		796,160		406,681	96
Other income, net		3,356		8,778	(62)		11,547		16,549	(30)		4,837		3,356	44		9,783		11,547	(15)
Earnings before income taxes		250,982		200,979	25		418,228		396,351	6		415,482		250,982	66		805,943		418,228	93
Income tax expense		66,794		47,449	41		111,258		102,710	8		98,508		66,794	47		201,019		111,258	81
Net earnings		184,188		153,530	20		306,970		293,641	5		316,974		184,188	72		604,924		306,970	97
Less net earnings attributable to the noncontrolling interest		319		381	(16)		757		793	(5)		602		319	89		1,332		757	76
Net earnings attributable to shareholders	$	183,869	$	153,149	20%	$	306,213	$	292,848	5%	$	316,372	$	183,869	72%	$	603,592	$	306,213	97%

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

Airfreight services revenues and expenses increased 93%20% and ~~47%~~22%, respectively, during the three ~~and six~~ months ended June 30, ~~2020, respectively,~~2021, as compared with the same ~~periods for 2019, primarily~~period in 2020, due to ~~133~~%a 37% increase in tonnage offset by 14% and ~~69% increases~~12% decrease in average sell and buy rates, ~~offset by 10% and 9% declines in tonnage. Sell rates~~respectively. Tonnage increased in all regions with the largest increase incoming from exports out of North ~~Asia. Tonnage declined in all regions except North Asia.~~America, North Asia ~~airfreight services revenue represented 32%~~ and ~~15%~~South Asia compared to low levels of ~~the total Company consolidated revenues~~activity in the second quarter of 2020 due to pandemic related closures in the United States. Average sell and ~~2019, respectively. In~~buy rates decreased in most regions from the record high rates experienced in 2020 ~~average sell rates increased~~caused by the sudden reduction in ~~all regions, peaking~~available belly space for cargo, with the largest impacts in ~~April~~North America, North Asia and ~~May and started declining in June.~~South Asia.

Airfreight services revenues and expenses increased ~~102~~%48% and ~~54%~~49%, respectively, during the ~~three and~~ six months ended June 30, ~~2020, respectively,~~2021, as compared with the same ~~periods for 2019, principally as~~period in 2020, due to a ~~result of a 133%~~33% increase in tonnage and ~~70%~~12% and 13% increase in average sell and buy ~~rates.~~ ~~Buy~~ rates, respectively. Tonnage increased in all regions with the largest increase incoming from exports out of North America, North Asia and South Asia.

~~The decrease in airfreight tonnage~~ This was primarily due to low levels of activity in the ~~global pandemic. As~~first half of 2020 in the United States and first quarter of 2020 in China as a result of ~~the global~~ pandemic ~~governments around the world have implemented travel restrictions~~related closures. Average sell and ~~suspended non-essential services. This has caused supply chain disruptions for our domestic and international customers, which correspondingly decreased our airfreight volumes. South Asia,~~buy rates increased in all regions except North America ~~and Europe had decreases in tonnage of~~ 45~~%, 15% and 14% for~~where the three months ended June 30, 2020 and 30%, 9% and 9% for the six months ended June 30, 2020. North Asia had increases in tonnage of 14% and 3%, in the three months and six months ended June 30, 2020, respectively.sell rate decreased.

These conditions ~~created~~create a high degree of volatility in volumes, average buy rates and sell rates and are expected to continue at least for the remainder of the year as international passenger flights are not expected to return to pre-pandemic levels and additional capacity from freighters is limited. The continued historically average high buy and sell ~~rates.~~rates have significantly contributed to the growth in our expenses and revenues and financial results in the first half of 2021. These unprecedented operating conditions are not expected to be sustained long-term. We are unable to predict how these uncertainties and any future disruptions will affect our future operations or financial results.

Ocean freight consolidation, direct ocean forwarding and order management are the three basic services that constitute and are collectively referred to as ocean freight and ocean services. Ocean freight and ocean services revenues ~~decreased~~ ~~10%~~increased 124% and ~~11%~~ 109%, respectively, while expenses increased 139% and 121%, for the three and six months ended June 30, ~~2020~~ 2021as compared with the same periods ~~in 2019. Ocean freight and ocean services expenses~~ ~~decreased 7% and 10%~~ ~~for the~~ three and six months ended June 30, 2020 ~~as compared with the same periods in 2019.~~ . The largest component of our ocean freight and ocean services revenue ~~was~~is derived from ocean freight consolidation, which represented 6377% and ~~66%~~63% of ocean freight and ocean services revenue for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Ocean freight consolidation revenues and expenses ~~decreased 10~~%increased 177% and 8%178%, respectively, for the three months ended June 30, ~~2020~~2021 as compared with the same ~~period~~periods in ~~2019,~~2020, primarily due to a ~~14% decline~~109% and 108% increase in ~~containers shipped across all regions, partially offset by an increase in~~average sell and buy ~~rates. Ocean freight consolidation revenues~~rates, respectively, and a 34% increase in containers shipped. Revenues and expenses ~~decreased 15~~%increased 156% and ~~14%~~157%, respectively, for the six months ended June ~~30, 2020~~2021 as compared with the same ~~period~~periods in ~~2019,~~2020, primarily due to a ~~12% decline~~96% and 95% increase in average sell and buy rates, respectively, and a 32% increase in containers shipped. ~~Additionally, for~~Demand started increasing in the ~~six months ended June 30,~~second half of 2020 and continued to increase through the ~~changes~~first half of 2021 due to backlogs in supply chains, low customer inventory levels, and high consumer demand creating a severe imbalance between demand and capacity in particular on exports from North Asia and South Asia. The deficiency in available capacity continues to be affected by congestion at ports due to labor and equipment shortages, which disrupted sailing schedules, and resulted in record high average buy rates. Average sell rates and volumes increased in first half of 2021, compared to low levels of activity in China in the first quarter of 2020 and in North America in the first half of 2020 due to pandemic related closures. These extremely challenging conditions are impacting the ability to secure necessary capacity from ocean carriers, as well as the time and resources required to process shipments and meet the sharply growing demands of customers.

Containers shipped were up in all regions with the largest increase from exports out of North Asia and South Asia. North Asia Ocean freight ~~consolidation~~and ocean services revenues increased 137% and 144%, respectively, while directly related expenses ~~include a revised presentation of destination services that started in the second quarter of 2019, which decreased revenues~~increased 154% and ~~directly related operating expenses in ocean freight consolidation but did not change consolidated operating income.~~

~~Direct ocean freight forwarding revenues~~ ~~increased 1% and 5%, respectively, while expenses increased 6% and 12%~~161%, for the three and six months ended June 30, ~~2020, principally~~2021primarily due to higher ~~volumes~~average sell rates and ~~changes~~buy rates and increases in customer mix primarily in North America. Order management revenues decreased 20% and 14% respectively, and expenses decreased 19% and 15%, respectively for the three months ended June 30, 2020 primarily due to lower volumes in North Asia, mostly from the retail industry.

~~North~~containers shipped. South Asia ocean freight and ocean services revenues increased 219% and 169%, respectively, while directly related expenses ~~decreased 11%~~increased 252% and ~~10%~~191%, respectively, for the three ~~months ended June 30, 2020, primarily due to a decrease in container volume partially offset by higher sell~~ and ~~buy rates. North Asia ocean freight and ocean services revenues and expenses decreased 22% for the~~ six months ended June 30, ~~2020, as compared with~~2021for the same ~~period in 2019, primarily~~reasons as North Asia.

Direct ocean freight forwarding revenues increased 27% and 23%, respectively, while expenses increased 34% and 28%, for the three and six months ended June 30, 2021principally due to ~~a decrease~~higher volumes and increased ancillary services provided primarily in ~~container volume. The decline in containers shipped from~~ North Asia ~~followed decreases in trade volumes starting in 2019~~ and ~~continuing with~~Europe at higher rates. Order management revenues increased 46% and 39%, respectively, while expenses increased 50% and 41%, for the ~~pandemic.~~three and six months ended June 30, 2021due to higher volumes.

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

Customs brokerage and other services revenues ~~decreased 13~~%increased 51% and 9%41%, respectively, and expenses ~~decreased~~ 16%increased 63% and ~~12%~~50% for the three and six months ended June 30, ~~2020,~~2021, respectively, as compared with the same ~~periods~~period in ~~2019,~~2020, primarily due to ~~decreases~~an increase in shipments from existing ~~customers.~~and new customers, an increase in demand for brokerage services, in part due to Brexit, and higher charges on import services due to port congestion. Road freight, warehousing and distribution services also grew as a result of higher volumes. Slowdowns due to the pandemic related closures affected volumes, particularly in aerospace, automotive, oil and energy and certain portions of the retail ~~sectors.~~sectors in 2020 creating a backlog in supply chains that resulted in higher demand for services in the first half of 2021. Customers continue to value our brokerage services due to changing tariffs and increasing complexity in the declaration process. Customers seek knowledgeable customs brokers with sophisticated computerized capabilities critical to an overall logistics management program that are necessary to rapidly respond to changes in the regulatory and security environment.

North America revenues ~~decreased~~ 17%increased 57% and ~~12%~~44% and directly related expenses ~~decreased 22%~~increased 78% and ~~16%~~60% for the three and six months ended June 30, ~~2020,~~2021, respectively, as compared with the same ~~periods~~period for ~~2019,~~2020, primarily as a result of ~~lower~~higher volumes in customs brokerage and ~~road freight.~~higher charges on import services due to port congestion. Europe revenues increased 57% and 47% and directly related expenses increased 61% and 45% for the three and six months ended June 30, 2021, respectively, as compared with the same period for 2020, primarily due to an increase in demand for brokerage services, in part due to Brexit.

Salaries and related costs increased by ~~11%~~22% and 3%27% for the three and six months ended June 30, ~~2020,~~2021, respectively, as compared with the same ~~periods~~period in ~~2019,~~2020, principally due to increases in commissions and bonuses earned from higher revenues and operating income.

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

Our management compensation programs have always been incentive-based and performance driven. Bonuses to field and executive management for the six months ended June 30, ~~2020~~2021 were up ~~15%~~65% when compared to the same period in ~~2019. Bonuses under the executive incentive compensation plan were consistent with the same period in 2019,~~2020, primarily due to ana 96% increase in operating income offset by a reduction made to senior executive management bonus allocations, as well as unused bonus allocations available for future investments in the development of key personnel.

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

Other overhead expenses ~~decreased 6~~%increased 11% and 1%5%, respectively, for the three and six months ended June 30, ~~2020, respectively,~~2021, as compared with the same periods in ~~2019.~~ 2020. The ~~decrease~~increases in expenses ~~was due to~~are the result of increases from renting additional space, higher local tax expenses, certain operational expenses and technology related costs. For the six months ended June 30, 2021 increases were partially offset by a significant decrease in travel and entertainment ~~expense offset by an increase~~expenses due to travel restrictions. As travel restrictions ease in ~~bad debt expense, claims~~the future, we expect travel and ~~legal expense.~~entertainment expenses to increase. We will continue to make important investments in people, processes and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.

Our consolidated effective income tax rate was ~~26.6%~~23.7% and 24.9%, respectively, for the three and six months ended June 30, ~~2020,~~2021 as compared to ~~23.6% and 25.9%~~26.6% for the same periods in ~~2019.~~2020. The three and six months ended June 30, 2021 effective tax rate benefited from increased tax deductions related to share-based compensation and a favorable adjustment to the deferred tax liability for unremitted foreign earnings when compared to the same periods in 2020. The effect of higher average tax rates of our international subsidiaries, when compared to U.S. federal and state tax rates, were partially offset by U.S. foreign tax credits and U.S. income tax deductions for Foreign-derived intangible income (FDII). ~~Additionally, the three months ended June 30, 2019 benefited from a state income tax refund.~~

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

The nature of our worldwide operations necessitates dealing with a multitude of currencies other than the U.S. dollar. This results in our being exposed to the inherent risks of volatile international currency markets and governmental interference. Some of the countries where we maintain offices and/or agency relationships have strict currency control regulations, which influence our ability to hedge foreign currency exposure. We try to compensate for these exposures by accelerating international currency settlements among our offices and agents. We may enter into foreign currency hedging transactions where there are regulatory or commercial limitations on our ability to move money freely around the world or the short-term financial outlook in any country is such that hedging is the most time-sensitive way to mitigate short-term exchange losses. Any such hedging activity during the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 was insignificant. We had no foreign currency derivatives outstanding at June 30, ~~2020~~2021 and December 31, ~~2019. During~~2020. For both the three months ended June 30, 2021 and 2020 net foreign currency losses were approximately $4 million. During the six months ended June 30, 2021 net foreign currency losses were approximately $2 million. During the six months ended June 30, 2020 net foreign currency gains were insignificant. ~~During the three and six months ended June 30, 2019, net foreign currency losses were approximately $2 million and $4 million, respectively.~~

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

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

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

Our principal source of liquidity is cash and cash equivalents and cash generated from operating activities. Net cash provided by operating activities for the three and six months ended June 30, ~~2020~~2021 was $30 million and $386 million, respectively, as compared with $187 million and $352 ~~million as compared with $156 million and $445~~ million for the same periods in ~~2019.~~2020. The ~~increase~~decrease of ~~$31~~$157 million infor the three months ended June 30, ~~2020~~ 2021 was primarily due to increases in accounts receivables from growth in revenues and slower collections from customers. The increase of $34 million for the six months ended June 30, 2021 was primarily due to higher airfreight and ocean revenues partially offset by changes in working capital, principally as a result of excess customer billings over collections when compared to the same period in 2019. The decrease of $93 million in the six months ended June 30, 2020 was primarily due to changes in working capital, primarily as a result of ~~increases in accounts receivable from increased airfreight revenues during the second quarter of 2020 when compared to the same period in 2019.~~ capital. At June 30, ~~2020,~~2021, working capital was ~~$1,570~~$2,500 million, including cash and cash equivalents of ~~$1,180~~$1,674 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at June 30, ~~2020.~~2021. Management believes that our current cash position and operating cash flows will be sufficient to meet our capital and liquidity requirements for at least the next 12 months and thereafter for the foreseeable ~~future, including meeting any contingent liabilities related to standby letters of credit and other obligations.~~future.

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

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

Cash used in investing activities for the three and six months ended June 30, ~~2020~~2021 was ~~$22~~$6 million and ~~$28~~$15 million, respectively, as compared with ~~$12~~$22 million and ~~$21~~$28 million infor the same periods ~~of 2019,~~in 2020, primarily for capital expenditures. Capital expenditures in the three and six months ended June 30, ~~2020~~2021 were primarily related ~~primarily~~ to ~~our purchase of a less-than-truckload digital online shipping platform,~~ continuing investments in building and leasehold improvements and technology and facilities equipment. ~~Occasionally, we elect to~~Capital expenditures in 2020 included the purchase ~~buildings to house staff and to facilitate the staging~~ of ~~customers’ freight.~~a less-than-truckload digital online shipping platform. Total anticipated capital expenditures in ~~2020~~2021 are currently estimated to be ~~$60~~$45 million. This includes routine capital expenditures and investments in technology.

Cash ~~used in~~from financing activities during the three and six months ended June 30, ~~2020~~2021 was ~~$98~~$152 million and ~~$359~~$220 million, respectively, as compared with ~~$250~~$98 million and ~~$267~~$359 million for the same periods in ~~2019.~~2020. We use the proceeds from stock option exercises, employee stock purchases and available cash to repurchase our common stock on the open market to limit the growth in ~~issued and~~ outstanding shares. During the three and six months ended June 30, ~~2020,~~2021 we used cash to repurchase ~~0.4~~0.5 million and ~~4.4~~1.4 million shares of common stock, ~~to reduce the number of total outstanding shares,~~respectively, compared to ~~2.6~~0.4 million and ~~3.2~~4.4 million in the same periods in ~~2019.~~2020.

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

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

We maintain international unsecured bank lines of credit. At June 30, ~~2020,~~2021, we were contingently liable for ~~$68~~$75 million from standby letters of credit and guarantees. The standby letters of credit and guarantees relate to obligations of our foreign subsidiaries for credit extended in the ordinary course of business by direct carriers, primarily airlines, and for duty and tax deferrals available from governmental entities responsible for customs and value-added-tax (VAT) taxation. The total underlying amounts due and payable for transportation and governmental excises are properly recorded as obligations in the accounting records of the respective foreign subsidiaries, and there would be no need to record additional expense in the unlikely event the parent company is required to perform.

Our foreign subsidiaries regularly remit dividends to the U.S. parent company after evaluating their working capital requirements and funds necessary to finance local capital expenditures. In some cases, our ability to repatriate funds from foreign operations may be subject to foreign exchange controls. At June 30, ~~2020,~~2021, cash and cash equivalent balances of ~~$599~~$751 million were held by our non-United States subsidiaries, of which ~~$20~~$15 million was held in banks in the United States. Earnings of our foreign subsidiaries are not considered to be indefinitely reinvested outside of the United States.

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

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

Foreign exchange rate sensitivity analysis can be quantified by estimating the impact on our earnings as a result of hypothetical changes in the value of the U.S. dollar, our functional currency, relative to the other currencies in which we transact business. All other things being equal, an average 10% weakening of the U.S. dollar, throughout the six months ended June 30, ~~2020,~~2021, would have had the effect of raising operating income by approximately ~~$32~~$53 million. An average 10% strengthening of the U.S. dollar, for the same period, would have the effect of reducing operating income by approximately ~~$26~~$43 million. This analysis does not take into account changes in shipping patterns based upon this hypothetical currency fluctuation. For example, a weakening in the U.S. dollar would be expected to increase exports from the United States and decrease imports into the United States over some relevant period of time, but the exact effect of this change cannot be quantified without making speculative assumptions.

We currently do not use derivative financial instruments to manage foreign currency risk and only enter into foreign currency hedging transactions in limited locations where regulatory or commercial limitations restrict our ability to move money freely. Any such hedging activity throughout the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 was insignificant. ~~During~~For both the three months ended June 30, 2021 and 2020 net foreign currency losses were approximately $4$4 million. During the six months ended June 30, 2021 net foreign currency losses were approximately $2 million. During the six months ended June 30, 2020 net foreign currency gains were insignificant. ~~During the three and six months ended June 30, 2019, net foreign currency losses were approximately $2 million and $4 million.~~ We had no foreign currency derivatives outstanding at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. We instead follow a policy of accelerating international currency settlements to manage foreign exchange risk relative to intercompany billings. As of June 30, ~~2020,~~2021, we had approximately ~~$84~~$171 million of net unsettled intercompany transactions. The majority of intercompany billings are resolved within 30 days.

At June 30, ~~2020,~~2021, we had cash and cash equivalents of ~~$1,180~~$1,674 million of which ~~$604~~$912 million was invested at various short-term market interest rates. Other than our recorded lease liabilities, we had no long-term obligations or debt at June 30, ~~2020.~~2021. A hypothetical change in the interest rate of 10 basis points at June 30, ~~2020~~2021 would not have a significant impact on our earnings. In management’s opinion, there has been no material change in our interest rate risk exposure in the second quarter of ~~2020.~~2021.

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

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

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

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

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

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

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

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

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

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

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

•increased global concerns regarding working conditions and environmental sustainability;

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

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

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

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

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

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

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

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

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

	Three Months ended Mar 31, 2021
	As Reported		Adjustments			As Corrected
Revenues:
Airfreight services	$	1,476,961	$	(151,046	)	$	1,325,915
Ocean freight and ocean services		958,178		(4,266	)		953,912
Customs brokerage and other services		922,401		(3,408	)		918,993
Total revenues¹		3,357,540		(158,720	)		3,198,820

Directly related transportation operating expenses:
Airfreight services	$	1,105,590	$	(151,046	)	$	954,544
Ocean freight and ocean services		746,701		(4,266	)		742,435
Customs brokerage and other services		553,713		(3,408	)		550,305
Total directly related transportation operating expenses¹		2,406,004		(158,720	)		2,247,284

~~Novel Coronavirus~~ ~~(COVID-19)~~ •		~~COVID-19 significantly impacted worldwide economic conditions~~changes and ~~global trade~~uncertainties in governmental policies and ~~may continue to have an adverse effect on our operations, and the operations of our service providers and our customers,~~inter-governmental disputes, which may further impact our business. COVID-19 was declared as a global health emergency and later declared as a global pandemic by the World Health Organization. As a result, governments have implemented travel restrictions, mandated lockdowns and other precautionary measures that resulted in significant business and supply chain disruptions and a slowdown in international trade. This crisis has affected, and is expected to continue affecting, our business in many aspects. Governments have designated our operations as essential business and we activated our business continuity plan to be able to conduct operations. Our facilities and employees are operating under the constraints of special protective measures and many are working remotely. These disruptions are also threatening the financial stability of our service providers and the ability to efficiently and profitably route our customers’ freight. Reduced flight schedules and cancellations have significantly reduced available space for airfreight, while ocean carriers have continued to reduce their operating capacity. These freight market conditions create pricing volatility that challenges Expeditors’ ability to maintain historical unitary profitability. Many of our customers are experiencing disruptions in their revenue and cash flow, prompting these customers to renegotiate contractual terms and increasing our accounts receivable collection risks. Such conditions could result in ~~the loss~~increased tariff rates, quota restrictions, trade barriers and other types of ~~business and additional bad debt allowances in the future if our customers’ ability to pay deteriorates.~~ Although we are monitoring the situation, we cannot predict for how long, or the ultimate extent to which the pandemic and related precautionary measures may disrupt our operations. Any significant disruption resulting from this on a large scale or over an extended period of time would negatively affect our business and our financial results.

~~Service Providers~~		As a non-asset based provider of global logistics services, Expeditors depends on a variety of asset-based service providers, including air, ocean and ground freight carriers. The quality and profitability of our services depend upon effective selection and oversight of our service providers. COVID-19 places significant stress on our air, ocean and freight ground carriers, which may continue to result in reduced carrier capacity or availability, pricing volatility or more limited carrier transportation schedules which could adversely impact our operations and financial results. During the pandemic, air carriers have been particularly affected having to cancel flights due to travel restrictions resulting in dramatic drops in revenues, historical losses and liquidity challenges. Ocean carriers have incurred significant operating losses in recent years, further exacerbated by trade reductions from COVID-19 measures, and are highly leveraged with debt. Additionally, several ocean carriers have consolidated, with the potential for more to occur in the future. Changes in the financial stability, operating capabilities and capacity of asset-based carriers and capacity allotment made available to Expeditors by asset-based carriers affects us in unpredictable ways. Any combination of reduced carrier capacity or availability, pricing volatility or more limited carrier transportation schedules, such as those caused by the pandemic, could further negatively affect our ability to execute services and maintain profitability. Expeditors cannot predict whether relief measures extended by certain governments will be effective in supporting the financial viability of carriers nor can we predict the long-term effects of this crisis on carriers’ financial stability and ability to provide services. Additionally, Expeditors' carriers are subject to increasingly stringent laws, which could, directly or indirectly, have a material adverse effect on our business. Future regulatory developments in the U.S. and abroad could adversely affect operations and increase operating costs in the transportation industry, which in turn could increase our purchased transportation costs. If we are unable to pass such costs on to our customers, our business and results of operations could be materially adversely affected.
		restrictions;

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans		Maximum number of shares that may yet be purchased under the plans
April 1-30, 2020		—	$	—		—		6,272,162
May 1-31, 2020		—		—		—		6,931,797
June 1-30, 2020		400,000		77.46		400,000		6,816,311
Total		400,000	$	77.46		400,000		6,816,311


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


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

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

	Three Months ended June 30, 2020
	As Reported		Adjustments			As Corrected
Revenues:
Airfreight services	$	1,434,590	$	(164,936	)	$	1,269,654
Ocean freight and ocean services		491,712		(2,327	)		489,385
Customs brokerage and other services		654,330		(2,291	)		652,039
Total revenues¹		2,580,632		(169,554	)		2,411,078

Directly related transportation operating expenses:
Airfreight services	$	1,097,073	$	(164,936	)	$	932,137
Ocean freight and ocean services		363,599		(2,327	)		361,272
Customs brokerage and other services		370,369		(2,291	)		368,078
Total directly related transportation operating expenses¹		1,831,041		(169,554	)		1,661,487

	Six Months ended June 30, 2020
	As Reported		Adjustments			As Corrected
Revenues:
Airfreight services	$	2,143,629	$	(218,377	)	$	1,925,252
Ocean freight and ocean services		985,139		(4,414	)		980,725
Customs brokerage and other services		1,353,728		(4,860	)		1,348,868
Total revenues¹		4,482,496		(227,651	)		4,254,845

Directly related transportation operating expenses:
Airfreight services	$	1,617,242	$	(218,377	)	$	1,398,865
Ocean freight and ocean services		730,082		(4,414	)		725,668
Customs brokerage and other services		770,445		(4,860	)		765,585
Total directly related transportation operating expenses¹		3,117,769		(227,651	)		2,890,118

Exhibit Number		Description
~~3.2~~		~~The Company's Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to Form 8-K filed on or about August 4, 2020.)~~

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

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

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

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

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

		EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

August ~~6, 2020~~5, 2021		/s/ JEFFREY S. MUSSER
		Jeffrey S. Musser, President, Chief Executive Officer and Director

August ~~6, 2020~~5, 2021		/s/ BRADLEY S. POWELL
		Bradley S. Powell, Senior Vice President and Chief Financial Officer