Expeditors International Of Washington Inc,
Fiscal Year 2025 Q3.

Airfreight services: Airfreight services revenues and expenses increased 11% and 8%, respectively, during the three months ended June 30, 2025, as compared with the same periods in 2024, due to a 7% increase in tonnage and 4% and 3% increases in average sell and buy rates, respectively. Airfreight services revenues and expenses both increased 14%, respectively, during the six months ended June 30, 2025, as compared with the same periods in 2024, due to an 8% increase in tonnage and 7% increases in both average sell and buy rates, respectively. Tonnage increased in most regions during the three and six months ended June 30, 2025, as compared with the same periods in 2024, as a result of increased market demand primarily from technology customers. Tonnage in the first half of 2025 was elevated as shippers accelerated orders to front load deliveries in anticipation of higher tariffs in 2025. Average sell and buy rates increased during the three and six months ended June 30, 2025 on exports out of South Asia and Europe due to elevated demand and limited capacity. The imbalance between demand and capacity is due to sourcing relocations to South Asia and was also fueled by higher volumes due to potential tariff increases. Average sell and buy rates for North Asia and MAIR exports also increased during the six months ended June 30, 2025, mainly due to strong first-quarter demand in advance of the elimination of the de minimis exemption and increase in tariffs. Seasonal changes in demand, impact from disruptions in the ocean market due to security concerns, variable demand for airfreight capacity from direct e-commerce business, including the effects of the elimination of low-value de minimis exemption on shipments from China could cause volatility in average buy rates on certain lanes. Additionally, geopolitical concerns, inter-governmental trade disputes, new tariffs on imports into the US and retaliatory actions from other countries create uncertainty in the economy and the trade environment. As shippers and carriers react to these volatile conditions, it may negatively affect demand for airfreight services, which could significantly reduce our volumes and average sell and buy rates in the coming quarters. Though we are unable to predict how these uncertainties and any future disruptions may affect our operations or financial results prospectively, these conditions could result in significant decreases in our revenues and operating income.

Ocean freight and ocean services: 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 and expense increased 4% and 1%, respectively, for the three months ended June 30, 2025 as compared with the same period in 2024. Ocean freight and ocean services revenues and expense both increased 19%, for the six months ended June 30, 2025 as compared with the same period in 2024. The largest component of our ocean freight and ocean services revenue is derived from ocean freight consolidation, which represented 69% and 66% of ocean freight and ocean services revenue for the six months ended June 30, 2025 and 2024, respectively. Ocean freight consolidation revenues increased 1% while expenses decreased 2%, respectively, for the three months ended June 30, 2025, as compared with the same period in 2024, primarily due to 6% and 9% decreases in average sell and buy rates, offset by a 7% increase in containers shipped. Ocean freight consolidation revenues and expenses increased 24% and 21%, respectively, for the six months ended June 30, 2025, as compared with the same period in 2024, primarily due to 15% and 13% increases in average sell and buy rates and an 8% increase in containers shipped. The declines in average buy rates and sell rates in the second quarter 2025 are due to a softening demand and an increase in available carrier capacity. This decline could continue for the remainder of 2025 if demand softens and additional vessels are brought into service. For the six months ended June 30, 2025, the average buy and sell rates increased compared to the same period in 2024 due to a sharp decrease in rates in the first quarter of 2024 versus an uptick in the first quarter 2025 resulting from high demand out of Asia in advance of anticipated increases in tariffs. Containers shipped were higher, most significantly on exports out of South Asia due to shippers managing shipments in anticipation of higher tariffs and relocating sourcing to that region. South Asia ocean freight and ocean services revenues increased 26% and expenses increased 24%, respectively, for the three months ended June 30, 2025 due to a 27% increase in containers shipped. For the six months ended June 30, 2025, South Asia ocean freight and ocean services revenues increased 46% and expenses increased 48%, respectively. Increases were primarily due to higher average sell and buy rates and a 23% increase in containers shipped due to the factors above. North Asia ocean freight and ocean services revenues and expenses decreased 8% and 10%, respectively, for the three months ended June 30, 2025, while they both increased 16% for the six months ended June 30, 2025. The decreases in the second quarter are due to declining containers shipped and average sell and buy rates compared to a strong first quarter 2025 when customers front loaded shipments out of China in anticipation of higher tariffs. For the three and six months ended June 30, 2025, North America ocean freight and ocean services revenues increased 10% and 16%, compared to the same periods in 2024, primarily due to higher revenues on imports while expenses only increased 8% and 7%. Order management revenues increased 7%, and 17%, respectively, for the three and six months ended June 30, 2025, and expenses increased 6% and 19% compared to the same periods in 2024 due to increases in volumes from new customers. Direct ocean freight forwarding revenues increased 9% and 6%, respectively, for the three and six months ended June 30, 2025, and expenses increased 11% and 8% principally due to higher volumes and increased ancillary services in the United States. The global economic and trade environment are increasingly uncertain and dynamic, with increases in trade tariffs and inter-governmental disputes. As shippers and carriers react to these volatile conditions, it may negatively affect demand, which could reduce our volumes and average sell and buy rates in the coming quarters. Further, carriers are adding new vessels which will increase capacity and which may also put downward pressure on rates. Sequentially, ocean containers shipped out of North Asia declined 11% in the second quarter compared to the first quarter of 2025. While some of those volumes are shifting to other lanes, as customers look to mitigate their exposure to U.S./China-specific tariffs, it is too early to know what the overall decline in volumes might be. These conditions could result in significant decreases in our revenues and operating income.

Customs brokerage and other services: Customs brokerage and other services revenues increased 10% and 11% and expenses increased 11% and 13% for the three and six months ended June 30, 2025, respectively, as compared with the same periods in 2024. These changes are primarily due to increases in customs clearances, import services, road freight and warehousing and distribution from higher shipment volumes, principally from shipments into North America and Europe. North America and Europe revenues increased 10% and 11% and expenses increased 8% and 16% for the three months ended June 30, 2025, respectively, as compared with the same period in 2024. North America and Europe revenues increased 12% and 9% and expenses increased 12% and 13% for the six months ended June 30, 2025, respectively, as compared with the same period in 2024. Our Other North America segment's expenses were negatively affected by $5 million in net foreign currency losses in the second quarter of 2025 compared to $2 million in net foreign currency gains in 2024 primarily driven by appreciation of the Mexican peso against the US dollar in 2025. Import services, including charges at ports such as detention, drayage, terminal charges and delivery, and road freight services increased significantly in the first half of 2025 because of higher volumes from shippers front loading deliveries in anticipation of higher tariffs. Customers value our brokerage services due to an increasingly dynamic and complex trade environment, and its impact on the declaration process. They seek knowledgeable customs brokers with sophisticated systems capabilities critical to an overall logistics management program that are necessary to rapidly respond to changes in the regulatory and security environment. Should international trade slow, lower volumes and pricing could significantly reduce our revenues and operating income.

Income tax expense: Our consolidated effective income tax rate increased to 28.7% and 27.3% for the three and six months ended June 30, 2025, as compared to 25.8% and 26.3% in the comparable periods of 2024 principally from higher foreign tax expense driven by changes in foreign currency exchange rates and certain non-deductible expenses. For the three and six months ended June 30, 2025 and 2024, there was no BEAT expense and GILTI expense was insignificant. All periods benefited from U.S. income tax deductions for FDII as well as available U.S. Federal foreign tax credits principally from withholding taxes related to our foreign operations. We have no liability as of June 30, 2025 and December 31, 2024 for the 15% corporate alternative minimum tax based on financial statement income (BMT), which became effective in 2023. For the periods ended June 30, 2025 and 2024, the amount of Pillar Two income tax expense was insignificant. On July 4, 2025, the 2025 Tax Act was enacted. The Act provides for several corporate tax changes including, but not limited to, restoring full expensing of domestic research and development costs, restoring immediate deductibility of certain capital expenditures, and changes in the computations of U.S. taxation on international earnings. We are in the process of evaluating the provisions of the 2025 Tax Act but do not expect that it will have a material impact to consolidated tax expense and cash flows for 2025. Elements of the enacted tax laws and regulations could be impacted by further legislative action as well as additional interpretations and guidance issued by the Internal Revenue Service or Treasury and by similar governmental bodies in jurisdictions outside of the U.S. Such changes could impact the estimates of the amounts the Company has recorded.

Liquidity and Capital Resources 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 months ended March 31, 2025 was $343 million as compared with $257 million for the same period in 2024. The increase of $86 million for the three months ended March 31, 2025, was primarily due to the collection of accounts receivable and higher net earnings. At March 31, 2025, working capital was $1,650 million, including cash and cash equivalents of $1,319 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at March 31, 2025. 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. As a customs broker, we make significant short-term 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 have resulted in increases in the amounts we advance on behalf of our customers. Given the short time frame until we are reimbursed, we do not expect these outlays to have a significant effect on our liquidity. Cash advances are a "pass through" and are not recorded as a component of revenue and expense, except for fees associated with this service charged to customers. 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. Cash used in investing activities for the three months ended March 31, 2025 was $13 million as compared with $10 million for the same periods in 2024, primarily for capital expenditures. Capital expenditures in the three months ended March 31, 2025 were primarily related to continuing investments in building and leasehold improvements and technology and facilities equipment. Total anticipated capital expenditures in 2025 are currently estimated to be $50 million. This includes routine capital expenditures, leasehold and building improvements and investments in technology. Cash used in financing activities during the three months ended March 31, 2025 was $166 million as compared with $375 million for the same period in 2024. We use the proceeds from stock option exercises, employee stock purchases and available cash to repurchase our common stock on the open market to reduce outstanding shares. During the three months ended March 31, 2025, we used cash to repurchase 1.5 million shares of common stock, compared to 3.0 million shares of common stock during the same periods in 2024. 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 ongoing uncertainties in the global economy, inflation, future interest rates, and political conflicts and uncertainty, 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 changes in competitors' behavior. We maintain international unsecured bank lines of credit for short-term working capital purposes. A few of these credit lines are supported by standby letters of credit issued by a United States bank or guarantees issued by the Company to the foreign banks issuing the credit line. At March 31, 2025, borrowings under these credit lines were $32 million and we were contingently liable for $72 million from standby letters of credit and guarantees. The standby letters of credit and guarantees primarily 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.

Overhead expenses: Salaries and related costs increased 11% for both the three and six months ended June 30, 2025 as compared with the same periods in 2024, principally due to increase in salaries & benefits and incentive compensation from improved operating results. Headcount increased 6% in 2025 compared to 2024 primarily in our operations and information technology. We hired employees in operations to support the added complexity and higher demand for customs brokerage services, primarily in North America, and support the growth in volumes transacted in certain regions such as South Asia, Europe and Latin America. We also continued to hire IT personnel to support essential investments which further strengthens our critical information systems. 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. Total bonuses to field and executive management for the six months ended June 30, 2025, increased 21% and 16%, respectively, when compared to the same period in 2024, primarily due to higher operating income. Generally, no management bonuses can be paid unless the relevant business unit is 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 increased 20% and 17% for the three and six months ended June 30, 2025, respectively, as compared with the same periods in 2024. This increase is primarily due to technology related expenses, increased consulting, higher rental and occupancy expenses, and indirect taxes. We expect to continue to enhance security and internal controls over our technology and systems and plan to deploy additional solutions which will result in increased expenses in the future. We will also continue to make important investments in people, processes and technology, as well as to invest in our strategic efforts to drive organic growth.

Currency and Other Risk Factors The nature of our worldwide operations necessitates transacting in a multitude of currencies other than the U.S. dollar. That exposes us to the inherent risks of volatile international currency markets and governmental interference. Some of the countries where we maintain offices and/or have agency relationships maintain strict currency control regulations that influence our ability to hedge foreign currency exposure. Historically, derivative financial instruments have not been used to manage foreign currency risk. In lieu of the use of foreign currency derivatives we instead try to compensate for these exposures by accelerating international currency settlements among our offices and agents. In the future, we may enter into foreign currency hedging transactions to manage our foreign currency risk. There are also regulatory or commercial limitations on our ability to move money freely, which could be impacted by inter-governmental disputes or new trade restrictions. We had no foreign currency derivatives outstanding at June 30, 2025 and December 31, 2024. For the three months ended June 30, 2025, net foreign currency losses were approximately $12 million compared to net foreign currency gains of approximately $5 million in the same period in 2024. During the six months ended June 30, 2025, net foreign currency losses were approximately $17 million compared to net foreign currency gains of approximately $12 million in the same period in 2024. Historically, our business has not been adversely affected by inflation. Beginning in 2021 and continuing through 2025, many countries including the United States experienced increasing levels of inflation. As a result, our business continues to experience rising labor costs, service provider rate increases, higher rent and occupancy and other expenses. Due to the high degree of competition in the marketplace we may not be able to increase our prices to our customers to offset this inflationary pressure, which could lead to an erosion in our margins and operating income in the future. Conversely, raising our prices to keep pace with inflationary pressure may result in a decrease in volume and customer demand for our services. As we are not required to purchase or maintain extensive property and equipment and have not otherwise incurred substantial interest rate-sensitive indebtedness, we currently have limited direct exposure to increased interest expense resulting from increases in interest rates. There is uncertainty as to how future 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 increase to our customers, fuel price increases could adversely affect our operating income.

Summary of Second Quarter 2025 The significant impacts are discussed within "Results of Operations" and summarized below. • Strong demand for all our services, in part due to U.S. importers managing shipments in anticipation of higher trade tariffs, which resulted in increased volumes and volatility in average sell and buy rates.

• Cash from operating activities was $179 million, up from $127 million from the second quarter 2024. • We returned $335 million to shareholders in common stock repurchases and dividends.

Industry Trends, Trade Conditions and Competition We operate in over 60 countries in the competitive global logistics industry and our activities are closely tied to the global economy. 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 investment and taxation. Periodically, governments consider changes to tariffs, impose trade restrictions and accords. Currently, the United States has undertaken a substantial global trade policies rebalancing effort resulting in significantly higher tariffs on imports. Increased tariffs on certain sectors for Canada, China, and Mexico took effect in the first quarter of 2025. Additionally, reciprocal tariffs on certain countries were expected to take effect in April 2025, but were later postponed to July and are now paused until August 2025, while trade negotiations by country are taking place. The United States has also imposed significantly higher tariffs on goods made in China, which are in effect. These measures have led to threatened or actual retaliatory tariffs and trade actions from several countries, including China and Canada. The potential for further tariff changes and trade restrictions remains high, creating an unpredictable environment for international trade. In addition, the "de minimis exemption", which exempted shipments of goods made in China and Hong Kong of less than $800 from tariffs, was terminated on May 2, 2025. Changes in import and export regulations may further impact the flow of trade and the global economy. We cannot predict how changes in tariffs and trade restrictions will affect our business. As governments impose import and export restrictions, shippers may adjust their sourcing patterns on a temporary or longer-term basis and potentially shift manufacturing to other countries over time. Additionally, the constant changes in trade regulations since the beginning of 2025 are adding complexity to the customs declarations process, making compliance with regulations increasingly challenging. 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. The future impact that these events may have on international trade, oil prices and security costs is uncertain. We do not have employees, assets, or operations in Russia, Ukraine, Israel, the Gaza Strip or the West Bank. While limited, any shipment activity is conducted with independent agents in those countries in compliance with all applicable trade sanctions, laws and regulations. We have a branch and employees in Lebanon but no significant assets. Our ability to provide services to our customers is highly dependent on good working relationships with a variety of entities, including airlines, ocean carrier lines and ground transportation providers, as well as governmental agencies. We select and engage with best-in-class, compliance-focused, efficiently run, growth-oriented partners, based upon defined value elements and are intentional in our relationship and performance management activity. We consider our current working relationships with these entities to be satisfactory. However, changes in the financial stability; operating capabilities, and the capacity of asset-based carriers; capacity allotments available from carriers; governmental regulation or deregulation efforts; modernization of the regulations governing customs brokerage; and/or changes in governmental restrictions, quota restrictions or trade accords could affect our business in unpredictable ways. 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. The global economic and trade environments remain highly uncertain; including inflation remaining higher than historical levels, volatility in oil prices, high interest rates and the conflicts in the Middle East and Ukraine. In the first quarter of 2025, we saw high demand on exports out of Asia and continued to see high demand on exports out of South Asia in the second quarter 2025, resulting in high average buy and sell rates where demand exceeded carrier capacity. However, we believe additional ocean and air transportation capacity will become available if demand softens due to uncertainty in economic and trade regulations, safe passage through the Red Sea resumes, and the capacity made available by the revocation of the de minimis tariff exemption for low-value goods made in China and Hong Kong. These conditions could result in declines in average sell and buy rates. We also expect that pricing volatility will continue as carriers adapt to changes in demand, changing fuel prices, available capacity, security risks and react to governmental trade policies and other regulations. Additionally, we cannot predict the direct or indirect impact that further changes in purchasing behavior, such as the evolution of international direct e-commerce platforms, could have on our business. Some customers are relocating manufacturing to other countries to mitigate the impact of higher tariffs on imports, reduce their supply chain risks, address disruptions caused by pandemics and geopolitical issues. These changes could negatively affect our business.

Industry Risks The current volatile international trade environment as a result of intergovernmental disputes, trade actions, increased tariffs and other geo-political risks may adversely impact our business and operating results. The United States has undertaken a substantial global tariff rebalancing effort, resulting in higher tariffs on imports, including significantly higher tariffs on goods made in China. These measures led to threatened or actual retaliatory tariffs on goods made in the United States from several countries, including China, the European Union, and Canada. This created an unpredictable trade environment for shippers to determine if and how to adapt their sourcing patterns given these new and fast-changing regulations. If these conditions result in a significant, short-term or longer-term, decrease or redistribution of international trade volumes, it could negatively affect our business volumes and revenues. Expeditors' activity is particularly exposed to trade volume impacts from trade actions and tariff disputes between China and the United States, as we generated 22% of our revenues and 17% of our operating income in 2024, on exports from China and Hong Kong. Uncertainty and changes to trade volumes, could also affect air and ocean freight carriers because they may adjust capacity and transportation schedules, which could result in volatility in available capacity, and average buy and sell rates, all of which could adversely impact our operations and financial results. In the second quarter 2025, our China to U.S. ocean volumes declined sequentially from the first quarter. While some of those volumes are shifting to other lanes, as customers look to mitigate their exposure to China-specific tariffs, it is too early to know what the overall decline in volumes might be. Many of our customers are subject to the increased tariffs and may experience increased costs of conducting business. This could result in a loss of business, bad debt or increased expenses in the future if our customers were to abandon cargo, enter into bankruptcy or insolvency proceedings, or their ability to pay deteriorates. Additionally, the increased complexity of trade regulations and customs declaration processes, challenge our ability to be in compliance with such ever-changing regulations and may require us to dedicate additional resources to our customs brokerage operations.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities ISSUER PURCHASES OF EQUITY SECURITIES (shares in thousands) Period Total number Average price Total number of shares paid per share of shares purchased purchased as part of publicly announced plans April 1-30, 2025 - $ - - 6,787 June 1-30, 2025 - - - 5,134 ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── May 1-31, 2025 2,000 112.05 2,000 5,246 Total 2,000 $ 112.05 2,000 5,134 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 outstanding shares. Subsequently, the Board of Directors has from time to time increased the amount of our common stock that may be repurchased. On February 19, 2024, the Board of Directors last authorized repurchases from 140 million shares of common stock down to 130 million outstanding shares of common stock. 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.

(b) Not applicable. (c) During the quarterly period ended June 30, 2025 , no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.