10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)

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

For the quarterly period ended September 30, 2017

OR

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

For the transition period from             to             

Commission File Number: 0-13468

___________________________________________

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of registrant as specified in its charter)

___________________________________________

Washington	91-1069248
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
1015 Third Avenue, 12th Floor, Seattle, Washington	98104
(Address of principal executive offices)	(Zip Code)

(206) 674-3400

(Registrant’s telephone number, including area code)

______________________________________________________

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 x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

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. (Check one):

Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o
Emerging growth company	o
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.				o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes o No x

At November 3, 2017, the number of shares outstanding of the issuer’s Common Stock was 177,702,850.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

	September 30, 2017			December 31, 2016
Current Assets:
Cash and cash equivalents	$	1,033,444		$	974,435
Accounts receivable, less allowance for doubtful accounts of $11,217 at September 30, 2017 and $9,247 at December 31, 2016	1,349,854			1,190,130
Other	135,623			54,014
Total current assets	2,518,921			2,218,579
Property and equipment, less accumulated depreciation and amortization of $413,219 at September 30, 2017 and $406,652 at December 31, 2016	513,070			536,572
Goodwill	7,927			7,927
Other assets, net	28,963			27,793
Total assets	$	3,068,881		$	2,790,871
Current Liabilities:
Accounts payable	$	836,055		$	726,571
Accrued expenses, primarily salaries and related costs	216,146			185,502
Federal, state and foreign income taxes	23,853			17,858
Total current liabilities	1,076,054			929,931
Deferred Federal and state income taxes	11,746			13,727
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued	—			—
Common stock, par value $0.01 per share. Issued and outstanding 177,559 shares at September 30, 2017 and 179,857 shares at December 31, 2016	1,776			1,799
Additional paid-in capital	1,464			2,642
Retained earnings	2,053,723			1,944,789
Accumulated other comprehensive loss	(78,960		)	(104,592		)
Total shareholders’ equity	1,978,003			1,844,638
Noncontrolling interest	3,078			2,575
Total equity	1,981,081			1,847,213
Total liabilities and equity	$	3,068,881		$	2,790,871

See accompanying notes to condensed consolidated financial statements.

2

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Revenues:
Airfreight services	$	735,164	$	621,566	$	2,022,577	$	1,764,512
Ocean freight and ocean services	563,386		495,460		1,585,730		1,414,344
Customs brokerage and other services	503,616		445,368		1,411,270		1,277,174
Total revenues	1,802,166		1,562,394		5,019,577		4,456,030
Operating Expenses:
Airfreight services	547,595		444,359		1,490,417		1,236,555
Ocean freight and ocean services	411,061		359,991		1,163,051		1,006,710
Customs brokerage and other services	244,368		212,785		675,729		597,320
Salaries and related costs	319,050		291,204		930,159		868,091
Rent and occupancy costs	30,533		27,091		87,826		81,029
Depreciation and amortization	12,272		11,882		36,241		34,853
Selling and promotion	10,608		10,134		32,476		29,817
Other	39,784		37,685		102,429		103,702
Total operating expenses	1,615,271		1,395,131		4,518,328		3,958,077
Operating income	186,895		167,263		501,249		497,953
Other Income (Expense):
Interest income	3,444		2,924		9,565		8,593
Other, net	96		925		2,584		3,407
Other income (expense), net	3,540		3,849		12,149		12,000
Earnings before income taxes	190,435		171,112		513,398		509,953
Income tax expense	69,829		63,163		190,470		188,518
Net earnings	120,606		107,949		322,928		321,435
Less net earnings attributable to the noncontrolling interest	343		368		550		1,218
Net earnings attributable to shareholders	$	120,263	$	107,581	$	322,378	$	320,217
Diluted earnings attributable to shareholders per share	$	0.66	$	0.59	$	1.77	$	1.75
Basic earnings attributable to shareholders per share	$	0.67	$	0.59	$	1.79	$	1.76
Dividends declared and paid per common share	$	—	$	—	$	0.42	$	0.40
Weighted average diluted shares outstanding	181,788		182,692		181,951		182,958
Weighted average basic shares outstanding	179,416		181,177		179,827		181,645

See accompanying notes to condensed consolidated financial statements.

3

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Net earnings	$	120,606	$	107,949	$	322,928	$	321,435
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax of $4,128 and $202 for the three months ended September 30, 2017 and 2016 and $14,019 and $223 for the nine months ended September 30, 2017 and 2016	7,489		260		25,585		(457		)
Other comprehensive income (loss)	7,489		260		25,585		(457		)
Comprehensive income	128,095		108,209		348,513		320,978
Less comprehensive income attributable to the noncontrolling interest	285		260		503		1,167
Comprehensive income attributable to shareholders	$	127,810	$	107,949	$	348,010	$	319,811

See accompanying notes to condensed consolidated financial statements.

4

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2017			2016			2017			2016
Operating Activities:
Net earnings	$	120,606		$	107,949		$	322,928		$	321,435
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses on accounts receivable	1,741			1,321			3,187			2,461
Deferred income tax (benefit) expense	(28,854		)	(1,439		)	(16,000		)	2,342
Stock compensation expense	11,210			10,476			39,036			34,264
Depreciation and amortization	12,272			11,882			36,241			34,853
Other, net	377			11			(148		)	41
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(126,102		)	(58,279		)	(123,790		)	6,087
Increase in accounts payable and accrued expenses	61,833			38,070			96,132			74,148
Increase (decrease) in income taxes payable, net	38,149			7,197			10,814			(16,612		)
Increase in other current assets	(5,872		)	(1,395		)	(6,147		)	(2,089		)
Net cash from operating activities	85,360			115,793			362,253			456,930
Investing Activities:
Purchase of property and equipment	(34,462		)	(12,659		)	(67,603		)	(39,973		)
Other, net	(261		)	1,617			(892		)	5,472
Net cash from investing activities	(34,723		)	(11,042		)	(68,495		)	(34,501		)
Financing Activities:
Proceeds from issuance of common stock	65,915			57,522			162,781			147,645
Repurchases of common stock	(202,776		)	(101,690		)	(340,736		)	(268,097		)
Dividends paid	—			—			(75,726		)	(73,000		)
Net cash from financing activities	(136,861		)	(44,168		)	(253,681		)	(193,452		)
Effect of exchange rate changes on cash and cash equivalents	4,758			1,853			18,932			5,927
(Decrease) increase in cash and cash equivalents	(81,466		)	62,436			59,009			234,904
Cash and cash equivalents at beginning of period	1,114,910			980,264			974,435			807,796
Cash and cash equivalents at end of period	$	1,033,444		$	1,042,700		$	1,033,444		$	1,042,700
Taxes Paid:
Income taxes	$	58,257		$	58,696		$	190,911		$	205,049

See accompanying notes to condensed consolidated financial statements.

5

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

Note 1. Summary of Significant Accounting Policies

A. Basis of Presentation

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, 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 to 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 23, 2017.

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 reclassified to conform to the 2017 presentation.

B. Accounts Receivable

The Company maintains an allowance for doubtful accounts, which is reviewed at least monthly for estimated losses resulting from the inability of its customers to make required payments for services and advances. Additional allowances may be necessary in the future if the ability of customers to pay deteriorates. The Company has recorded an allowance for doubtful accounts in the amounts of $11,217 as of September 30, 2017 and $9,247 as of December 31, 2016. Additions and write-offs have not been significant in the periods presented.

C. Use of Estimates

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 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 liabilities for the portion of the related exposure that the Company has self-insured, accrual of various tax liabilities, accrual of loss contingencies and calculation of share-based compensation expense. Actual results could differ from those estimates.

6

Note 2. Share-Based Compensation

The Company has historically granted the majority of its share-based awards during the second quarter of each fiscal year. On May 2, 2017, shareholders approved the 2017 Omnibus Incentive Plan (2017 Plan), which made available 2,500 shares of the Company's common stock in aggregate to be issued under any award type allowed by the 2017 Plan. In the nine-month period ended September 30, 2017, the Company awarded 583 restricted stock units (RSU) under the 2017 Plan to certain employees at a weighted-average grant date fair value of $54.04. The RSU vest annually over 3 years based on continued employment and are settled upon vesting in shares of the Company's common stock on a one-for-one basis. The value of an RSU grant is based on the Company's stock price on the date of grant. Additionally, in the second quarter of 2017 and 2016, respectively, 38 and 41 fully vested shares were granted to non-employee directors.

The Company also awarded 23 performance stock units (PSU) under the 2017 Plan. The PSU include performance conditions and a time-based vesting component. The final number of PSU will be determined using an adjustment factor of up to two times each PSU granted, depending on the degree of achievement of the designated performance targets. If the minimum performance thresholds are not achieved, no shares will be issued. Each PSU will convert to one share of the Company's common stock upon vesting.

RSU and PSU granted under the 2017 Plan have dividend equivalent rights, which entitle holders of RSU and PSU to the same dividend value per share as holders of common stock. Dividend equivalent rights are subject to the same vesting and other terms and conditions as the corresponding unvested RSU and PSU and are accumulated and paid in shares when the underlying awards vest.

Under the 2016 Stock Option Plan, 2,973 options were granted in the nine months ended September 30, 2016, vesting over 3 years from the date of grant. The Company does not plan to grant stock options in 2017.

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 and 682 and 703 were issued in the nine-month periods ended September 30, 2017 and 2016, respectively. The fair value of the employee stock purchase rights granted was $11.69 and $10.99 per share for the quarters ended September 30, 2017 and 2016, respectively.

The Company recognizes stock compensation expense based on an estimate of the fair value of awards granted to employees and directors under the Company’s omnibus incentive, stock option, director restricted stock and employee stock purchase rights plans. This expense, adjusted for expected forfeitures, is recognized in net earnings on a straight-line basis over the service periods as salaries and related expenses. RSU awards 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. Approximately $4 million of stock compensation expense was recognized in the second quarter of 2017 for RSU grants meeting retirement eligibility criteria.

Beginning on January 1, 2017, the Company adopted accounting guidance requiring that, prospectively, excess tax benefits and deficiencies be recorded in income tax expense for vesting of RSU, stock option exercises, cancellations and disqualifying dispositions of employee stock purchase plan shares. Also, the Company has elected to continue to estimate forfeitures expected to occur in determining compensation cost to be recognized in each period.

Total stock compensation expense and the total related tax benefit recognized are as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Stock compensation expense	$	11,210	$	10,476	$	39,036	$	34,264
Recognized tax benefit	$	2,311	$	2,149	$	8,187	$	5,928

7

Note 3. Basic and Diluted Earnings per Share

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:

	Three months ended
	September 30,
(Amounts in thousands, except per share amounts)	Net earnings attributable to shareholders		Weighted average shares	Earnings per share
2017
Basic earnings attributable to shareholders	$	120,263	179,416	$	0.67
Effect of dilutive potential common shares	—		2,372	—
Diluted earnings attributable to shareholders	$	120,263	181,788	$	0.66
2016
Basic earnings attributable to shareholders	$	107,581	181,177	$	0.59
Effect of dilutive potential common shares	—		1,515	—
Diluted earnings attributable to shareholders	$	107,581	182,692	$	0.59

	Nine months ended
	September 30,
(Amounts in thousands, except per share amounts)	Net earnings attributable to shareholders		Weighted average shares	Earnings per share
2017
Basic earnings attributable to shareholders	$	322,378	179,827	$	1.79
Effect of dilutive potential common shares	—		2,124	—
Diluted earnings attributable to shareholders	$	322,378	181,951	$	1.77
2016
Basic earnings attributable to shareholders	$	320,217	181,645	$	1.76
Effect of dilutive potential common shares	—		1,313	—
Diluted earnings attributable to shareholders	$	320,217	182,958	$	1.75

The following potential common shares have been excluded from the computation of diluted earnings per share because the effect would have been antidilutive:

	Three months ended		Nine months ended
	September 30,		September 30,
	2017	2016	2017	2016
Shares	1	8,646	1,233	9,516

8

Note 4. Components of Equity

The components of equity for the nine months ended September 30,2017 and 2016 are as follows:

	Shareholders’ equity			Noncontrolling interest		Total equity
Balance at December 31, 2016	$	1,844,638		2,575		1,847,213
Exercise of stock options	134,014			—		134,014
Issuance of shares under stock purchase plan	28,767			—		28,767
Shares repurchased under provisions of stock repurchase plans	(340,736		)	—		(340,736	)
Stock compensation expense	39,036			—		39,036
Net earnings	322,378			550		322,928
Other comprehensive income (loss)	25,632			(47	)	25,585
Dividends paid ($0.42 per share)	(75,726		)	—		(75,726	)
Balance at September 30, 2017	$	1,978,003		3,078		1,981,081
Balance at December 31, 2015	$	1,691,993		2,683		1,694,676
Exercise of stock options	119,509			—		119,509
Issuance of shares under stock purchase plan	28,136					28,136
Shares repurchased under provisions of stock repurchase plans	(268,097		)	—		(268,097	)
Stock compensation expense	34,264			—		34,264
Tax benefits from stock plans, net	(2,533		)	—		(2,533	)
Net earnings	320,217			1,218		321,435
Other comprehensive loss	(406		)	(51	)	(457	)
Dividends paid ($0.40 per share)	(73,000		)	—		(73,000	)
Balance at September 30, 2016	$	1,850,083		3,850		1,853,933

The Company has a Non-Discretionary Stock Repurchase Plan to repurchase shares from the proceeds of stock option exercises and employee stock purchases. During the nine-month periods ended September 30, 2017 and 2016, 2,902 and 2,822 shares were repurchased at an average price of $55.58 and $49.84 per share, respectively.

The Company also has a Discretionary Stock Repurchase Plan approved by the Board of Directors that authorizes management to reduce issued and outstanding stock down to 170 million shares of common stock. During the nine-month periods ended September 30, 2017 and 2016, 3,189 and 2,579 shares were repurchased at an average price of $56.26 and $49.41 per share, respectively.

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

On May 2, 2017, the Board of Directors declared a semi-annual dividend of $0.42 per share payable on June 15, 2017 to shareholders of record as of June 1, 2017. On May 3, 2016, the Board of Directors declared a semi-annual dividend of $0.40 per share payable on June 15, 2016 to shareholders of record as of June 1, 2016.

Subsequent to the end of the third quarter, on November 7, 2017, the Board of Directors declared a semi-annual dividend of $0.42 per share payable on December 15, 2017 to shareholders of record as of December 1, 2017.

9

Note 5. Assets Held for Sale

In January 2017, the Company formally approved a plan to sell land and buildings located in Miami, Florida. The decision to sell these assets was largely based upon changes in local operational requirements and the Company's intended use of the property. The net book value of the property assets is $80 million, and is reported within the United States segment. The Company continues to market the land and buildings at a selling price which, after selling costs, is expected to exceed the net book value. As of September 30, 2017, these assets are being reported as held for sale and are classified in other current assets.

Note 6. Fair Value of Financial Instruments

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.

Cash and cash equivalents consist of the following:

	September 30, 2017			December 31, 2016
	Cost		Fair Value	Cost	Fair Value
Cash and Cash Equivalents:
Cash and overnight deposits	$	385,432	385,432	406,787	406,787
Corporate commercial paper	613,433		613,825	507,777	507,889
Time deposits	34,579		34,579	59,871	59,871
Total cash and cash equivalents	$	1,033,444	1,033,836	974,435	974,547

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).

Note 7. Commitments

The Company generally enters into short-term, unconditional purchase obligations with asset-based providers reserving space on a guaranteed basis. The pricing of these obligations varies to some degree with market conditions. Historically, the Company has met these obligations in the normal course of business within one year. Purchase obligations outstanding as of September 30, 2017 totaled $62 million.

Additionally, the Company occupies offices and warehouse facilities under terms of operating leases expiring up to 2028. At September 30, 2017, future minimum annual lease payments under all noncancelable leases are as follows:

2017	$	16,984
2018	65,813
2019	53,209
2020	41,565
2021	27,696
Thereafter	47,009
	$	252,276

Note 8. Contingencies

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 September 30, 2017, 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.

10

Note 9. Business Segment Information

The Company is organized functionally in geographic operating segments. Accordingly, management focuses its attention on revenues, net revenues¹, operating income, identifiable assets, capital expenditures, depreciation and amortization 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.

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

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Three months ended September 30, 2017:
Revenues from unaffiliated customers	$	476,575	65,544	24,181	686,915	170,225	273,606	105,120	—		1,802,166
Transfers between geographic areas	26,888		2,782	3,679	5,253	5,681	10,302	5,318	(59,903	)	—
Total revenues	$	503,463	68,326	27,860	692,168	175,906	283,908	110,438	(59,903	)	1,802,166
Net revenues1	$	257,030	30,664	14,710	138,667	41,411	85,390	29,956	1,314		599,142
Operating income	$	74,645	9,215	2,652	72,070	11,697	11,124	5,495	(3	)	186,895
Identifiable assets at period end	$	1,636,293	100,651	52,238	446,826	143,893	473,509	212,210	3,261		3,068,881
Capital expenditures	$	7,398	263	2,436	589	390	23,138	248	—		34,462
Depreciation and amortization	$	7,905	405	310	1,313	569	1,309	461	—		12,272
Equity	$	1,345,266	52,212	25,709	231,831	102,477	139,688	119,649	(35,751	)	1,981,081
Three months ended September 30, 2016:
Revenues from unaffiliated customers	$	423,362	56,747	21,592	590,622	154,156	228,256	87,659	—		1,562,394
Transfers between geographic areas	24,610		2,770	3,724	5,368	6,206	9,938	5,551	(58,167	)	—
Total revenues	$	447,972	59,517	25,316	595,990	160,362	238,194	93,210	(58,167	)	1,562,394
Net revenues1	$	229,773	30,211	14,063	124,251	42,711	74,888	29,363	(1	)	545,259
Operating income	$	69,457	6,200	3,328	59,682	14,045	7,018	7,534	(1	)	167,263
Identifiable assets at period end	$	1,410,287	95,390	56,192	480,587	117,333	388,543	237,104	8,788		2,794,224
Capital expenditures	$	8,319	720	139	739	319	2,127	296	—		12,659
Depreciation and amortization	$	7,566	369	328	1,404	594	1,116	505	—		11,882
Equity	$	1,145,293	41,542	37,765	293,383	87,926	129,989	150,395	(32,360	)	1,853,933

11

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Nine months ended September 30, 2017:
Revenues from unaffiliated customers	$	1,354,811	187,997	69,747	1,873,393	475,163	764,596	293,870	—		5,019,577
Transfers between geographic areas	79,356		8,246	11,073	15,139	16,520	29,288	15,316	(174,938	)	—
Total revenues	$	1,434,167	196,243	80,820	1,888,532	491,683	793,884	309,186	(174,938	)	5,019,577
Net revenues1	$	737,842	84,630	43,634	371,459	117,634	242,244	89,973	2,964		1,690,380
Operating income	$	191,256	26,583	8,349	183,515	37,434	36,189	17,928	(5	)	501,249
Identifiable assets at period end	$	1,636,293	100,651	52,238	446,826	143,893	473,509	212,210	3,261		3,068,881
Capital expenditures	$	19,492	1,066	3,648	2,492	1,172	38,717	1,016	—		67,603
Depreciation and amortization	$	23,389	1,163	930	3,995	1,656	3,707	1,401	—		36,241
Equity	$	1,345,266	52,212	25,709	231,831	102,477	139,688	119,649	(35,751	)	1,981,081
Nine months ended September 30, 2016:
Revenues from unaffiliated customers	$	1,248,923	165,527	62,825	1,605,343	442,464	680,035	250,913	—		4,456,030
Transfers between geographic areas	79,617		8,141	11,512	15,849	18,338	30,396	16,452	(180,305	)	—
Total revenues	$	1,328,540	173,668	74,337	1,621,192	460,802	710,431	267,365	(180,305	)	4,456,030
Net revenues1	$	683,331	88,404	42,264	357,159	128,486	227,068	88,745	(12	)	1,615,445
Operating income	$	184,876	23,091	11,016	176,621	48,090	31,109	23,162	(12	)	497,953
Identifiable assets at period end	$	1,410,287	95,390	56,192	480,587	117,333	388,543	237,104	8,788		2,794,224
Capital expenditures	$	25,234	1,476	941	2,502	1,325	6,386	2,109	—		39,973
Depreciation and amortization	$	22,264	1,113	869	4,111	1,649	3,402	1,445	—		34,853
Equity	$	1,145,293	41,542	37,765	293,383	87,926	129,989	150,395	(32,360	)	1,853,933

_______________________

¹Net revenues are a non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. The Company's management believes that net revenues are a better measure than total revenues when evaluating the Company's operating segment performance since total revenues earned as a freight consolidator include the carriers' charges for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by the Company. Net revenue is one of the Company's primary operational and financial measures and demonstrates the Company's ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings.

12

The following table presents the calculation of consolidated net revenues:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Total revenues	$	1,802,166	$	1,562,394	$	5,019,577	$	4,456,030
Expenses:
Airfreight services	547,595		444,359		1,490,417		1,236,555
Ocean freight and ocean services	411,061		359,991		1,163,051		1,006,710
Customs brokerage and other services	244,368		212,785		675,729		597,320
Net revenues	$	599,142	$	545,259	$	1,690,380	$	1,615,445

13

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,” "Expeditors' Culture and Strategy," "International Trade and Competition," "Seasonality," “Critical Accounting Estimates,” "Recent Accounting Pronouncements," “Results of Operations,” “Currency and Other Risk Factors” and “Liquidity and Capital Resources” contain forward-looking statements. Words such as "will likely result," "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, and other characterizations of future events or circumstances are forward-looking statements. 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. Attention should be given to the factors identified and discussed in the Company's annual report on Form 10-K filed on February 23, 2017.

Overview

Expeditors International of Washington, Inc. (herein referred to as "Expeditors," the "Company," "we," "us," "our") is a global logistics company. Our services include air and ocean freight consolidation and forwarding, customs brokerage, warehousing and distribution, purchase order management, vendor consolidation, time-definite transportation services, cargo insurance and other logistics 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 from three principal sources: 1) airfreight services, 2) ocean freight and ocean services, and 3) customs brokerage and other services. These are the revenue categories presented in our financial statements.

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 reselling those services to our customers on a retail basis. The difference between the rate billed to our customers (the sell rate) and the rate we pay to the carrier (the buy rate) is termed “net revenue” (a non-GAAP measure), “yield” or “margin.” By consolidating shipments from multiple customers and concentrating our buying power, we are able to negotiate favorable buy rates from the direct carriers, while at the same time offering lower sell rates than customers would otherwise be able to negotiate themselves. 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.

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. 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 the primary obligor, are obligated to compensate direct carriers for services performed regardless of whether customers accept the service, have latitude in establishing price, have discretion in selecting the direct carrier, have credit risk or have several but not all of these indicators. Revenue is generally recorded on a net basis where we are not primarily obligated and do not have latitude in establishing prices. Such 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.

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 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 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

14

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. E. to the consolidated financial statements in our annual report on Form 10-K filed on February 23, 2017), almost all freight revenues and related expenses are recorded at origin and shipment profits are split between origin and destination offices by recording a commission fee or profit share revenue at destination and a corresponding commission or profit share expense as a component of origin consolidation costs.

Expeditors' Culture and Strategy

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 that demands:

• Total dedication, first and foremost, to providing superior customer service;

• Compliance with our policies and procedures and government regulations;

• Aggressive marketing of all of our service offerings;

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

• Ongoing development of key employees and management personnel via formal and informal means;

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

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

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

We reinforce these values with a compensation system that rewards employees for profitably managing the things they can control. This compensation system has been in place since we became a publicly traded company. There is no limit to how much a key manager can be compensated for success. We believe in a “real world” environment where the employees of our operating units are held accountable for the profit implications of their decisions. If these decisions result in operating losses, management generally must make up these losses with future operating profits, in the aggregate, before any cash incentive compensation can be earned. Executive management, in limited circumstances, makes exceptions at the branch operating unit level. At the same time, our policies, processes and relevant training focus on such things as cargo management, risk mitigation, service provider management, 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 failure to perpetuate our unique culture on a self-sustained basis throughout our organization may pose a greater threat to our continued success than any external force, which likely would be largely beyond our control. We 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 in which 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.

Our business growth strategy emphasizes a focus on the right markets and, within each market, on the right customers to drive profitable business growth. 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 ongoing concern over 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

15

trade obstacles, especially as governments promulgate new regulations 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. Many air and ocean carriers are highly leveraged with debt. Moreover, certain ocean carriers are facing significant liquidity challenges. This situation 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, space allotments available from carriers, governmental regulations, and/or trade accords could adversely affect our business in unpredictable ways.

International Trade 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, and laws and policies relating to tariffs, trade restrictions, foreign investments and taxation. Periodically, governments consider a variety of changes to current tariffs and trade restrictions and accords. We cannot predict which, if any, of these proposals may be adopted or the effects the adoption of any such proposal will have on our business. 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 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 in which we conduct business and the future impact that these events may have on international trade and oil prices.

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 volatile fuel costs, disruptions in port services, political unrest and fluctuating currency exchange rates. We expect these operating and competitive conditions to continue.

Ocean carriers have incurred substantial operating losses in recent years, and many are highly leveraged with debt. These financial challenges resulted in the 2016 bankruptcy of a major carrier, as well as multiple carrier acquisitions and carrier alliance formations. Carriers continue to pursue scale and market share in an effort to reduce operating costs and improve their financial results. Additionally, while overall global demand has recently increased, carriers continue to take delivery of new and larger ships, which creates additional capacity. When the market experiences seasonal peaks or any sort of disruption, the carriers react by increasing their pricing as quickly as possible. This carrier behavior creates pricing volatility that could impact Expeditors' ability to maintain historical unitary profitability.

The global economic environment and trade growth remain uncertain. We cannot predict what impact this may have on our operating results, freight volumes, pricing, 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 changes in consumer purchasing behavior, such as online shopping, could have on our business.

Seasonality

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 this seasonal trend will occur in the future. This pattern has been the result of, or influenced by, numerous factors, including weather patterns, national holidays, consumer demand, new product launches, economic conditions 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 consumer 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, product launches and/or manufacturing production delays. Additionally, many customers ship a significant portion of their goods at or near the end of a quarter and, therefore, we may not learn of a shortfall in revenues until late in a quarter. 

To the extent that a shortfall in revenues or earnings was not expected by securities analysts or investors, any such shortfall from levels predicted by securities analysts or investors could have an immediate and adverse effect on the trading price of our stock. 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.

16

Critical Accounting Estimates

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, 2016, filed on February 23, 2017. There have been no material changes to the critical accounting estimates previously disclosed in that report.

Recent Accounting Pronouncements

Revenue recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update amending existing revenue recognition guidance and requiring related detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of our revenues and cash flows arising from contracts with customers. The standard is effective for us beginning on January 1, 2018. We formed a cross-functional project team that is in the process of evaluating the adoption impacts for each of our products and services.

Under the current standard, our transportation revenue is recognized at the point in time freight is tendered to the direct carrier at origin. Under the new standard, our transportation and related services revenue will be recognized over time as control is transferred to the customer. We expect to defer more revenues under the new standard. We are also evaluating whether we act as principal or an agent with regards to our promise to transfer services to the customer and we expect the presentation to change for certain of our services from net to gross revenue amounts.

We are developing and implementing systems solutions and process changes to facilitate revenue recognition under the new standard. We are also identifying and designing changes to our internal controls to support the adoption. We will adopt this standard using the modified retrospective transition method applied to those contracts that are not completed as of January 1, 2018. Upon adoption, we will recognize the cumulative effect of adopting as an adjustment to our opening balance of retained earnings. Prior periods will not be retrospectively adjusted.

At this time, based on the nature of our operations and the short transit time of most of our transportation services, we do not believe that the adoption of the standard will have a material impact on our results of operations, financial position and cash flows once implemented. As we work towards completing our assessment, we continue to design and implement necessary process and system changes around gathering the data required to quantify the impact of the adoption and to comply with the new standard. We expect to complete our assessment of the impact towards the end of 2017.

Leases

In February 2016, the FASB issued an Accounting Standard Update changing the accounting for leases and includes a requirement to record all leases exceeding one year on the consolidated balance sheet as assets and liabilities. The new lease standard will be effective for us beginning on January 1, 2019 and will be adopted using a modified retrospective transition. Adoption will impact our consolidated balance sheets as future minimum lease payments under noncancelable leases totaled approximately $252 million as of September 30, 2017. We are currently evaluating our existing lease portfolios, including accumulating all of the necessary information required to properly evaluate and account for the leases under this new standard. Additionally, we are beginning the implementation of an enterprise-wide lease management system that, along with accompanying process changes, will assist us in the accounting and internal control changes necessary to meet the reporting and disclosure requirements of the new standard when it becomes effective.

Results of Operations

The following table shows the revenues and directly related expenses for our principal services and total net revenues (a non-GAAP measure calculated as revenues less directly related operating expenses attributable to our principal services) and our expenses for the three and nine-month periods ended September 30, 2017 and 2016, expressed as percentages of net revenues. Management believes that net revenues are a better measure than total revenues when analyzing and discussing management's effectiveness in managing our principal services since total revenues earned by Expeditors as a freight consolidator include the carriers’ charges to us for carrying the shipment, whereas revenues earned by Expeditors in our other capacities include primarily the commissions and fees actually earned by us. Net revenue is one of our primary operational and financial measures and demonstrates our ability to manage sell rates to customers with our ability to concentrate and leverage our purchasing power through effective consolidation of shipments from multiple customers utilizing a variety of transportation carriers and optimal routings. Using net revenue also provides a commonality for comparison among various services.

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 September 30,								Nine months ended September 30,
	2017				2016				2017				2016
	Amount		Percent of net revenues		Amount		Percent of net revenues		Amount		Percent of net revenues		Amount		Percent of net revenues
(in thousands)
Airfreight services:
Revenues	$	735,164			$	621,566			$	2,022,577			$	1,764,512
Expenses	547,595				444,359				1,490,417				1,236,555
Net revenues	187,569		31	%	177,207		32	%	532,160		31	%	527,957		33	%
Ocean freight services and ocean services:
Revenues	563,386				495,460				1,585,730				1,414,344
Expenses	411,061				359,991				1,163,051				1,006,710
Net revenues	152,325		26		135,469		25		422,679		25		407,634		25
Customs brokerage and other services:
Revenues	503,616				445,368				1,411,270				1,277,174
Expenses	244,368				212,785				675,729				597,320
Net revenues	259,248		43		232,583		43		735,541		44		679,854		42
Total net revenues	599,142		100		545,259		100		1,690,380		100		1,615,445		100
Overhead expenses:
Salaries and related costs	319,050		53		291,204		53		930,159		55		868,091		54
Other	93,197		16		86,792		16		258,972		15		249,401		15
Total overhead expenses	412,247		69		377,996		69		1,189,131		70		1,117,492		69
Operating income	186,895		31		167,263		31		501,249		30		497,953		31
Other income (expense), net	3,540		1		3,849		—		12,149		1		12,000		1
Earnings before income taxes	190,435		32		171,112		31		513,398		31		509,953		32
Income tax expense	69,829		12		63,163		11		190,470		12		188,518		12
Net earnings	120,606		20		107,949		20		322,928		19		321,435		20
Less net earnings attributable to the noncontrolling interest	343		—		368		—		550		—		1,218		—
Net earnings attributable to shareholders	$	120,263	20	%	$	107,581	20	%	$	322,378	19	%	$	320,217	20	%

Airfreight services:

Airfreight services revenues increased 18% and 15%, respectively, in the three and nine-month periods ended September 30, 2017, as compared with the same periods for 2016, primarily due to a 12% growth in tonnage in both periods and higher sell rates in response to increased buy rates resulting from higher overall market demand. Airfreight services expenses increased 23% and 21%, respectively, in the three and nine-month periods ended September 30, 2017, principally as a result of the increase in tonnage and higher buy rates due to tighter carrier capacity.

Airfreight services net revenues increased 6% for the three-month period ended September 30, 2017, as compared with the same period for 2016. This was principally due to 12% tonnage growth, partially offset by a 5% decrease in net revenue per kilo. Europe, North America, and North Asia net revenues increased by 20%, 8%, and 7%, respectively, while tonnage increased 13%, 19%, and 6%. Europe's average net revenue per kilo improved primarily due to the increases in average sell rates. Average net revenue per kilo declined in North America primarily due to competitive market conditions, which resulted in lower average sell rates. South Asia net revenues decreased 19% despite tonnage growth of 6%, primarily due to higher average buy rates. Carriers in South Asia increased pricing significantly as a result of higher demand relative to available capacity.

Airfreight services net revenues increased 1% for the nine-month period ended September 30, 2017, as compared with the same period for 2016. This was principally due to a 12% increase in tonnage, mostly offset by a 13% decrease in net revenue per kilo. Average net revenue per kilo declined in most regions primarily due to competitive market conditions and tight carrier capacity. Carriers in North Asia and South Asia increased pricing significantly as a result of higher demand relative to available capacity. North America and Europe net revenues increased by 4% and 10%, respectively, while tonnage increased 13% and 11%, respectively. North Asia net revenues remained flat, despite tonnage growth of 11%, due principally to higher average buy rates. South Asia net revenues decreased 18% despite tonnage growth of 10% primarily due to lower average sell rates and higher average buy rates.

The global airfreight market is experiencing imbalances between carrier capacity and demand in certain lanes, which is resulting in higher average buy rates. Customers remain focused on improving supply-chain efficiency, reducing overall logistics costs by negotiating lower rates and utilizing ocean freight whenever possible. We expect these trends to continue in conjunction with carriers' efforts to manage available capacity. These conditions could be affected by new product launches during periods that have historically experienced higher demand. Historically, we have experienced lower airfreight margins in the fourth quarter as seasonal volumes increase and carriers correspondingly increase buy rates. These conditions, should they continue to occur, could create a higher degree of volatility in volumes and, ultimately, buy and sell rates.

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 increased 14% and 12%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods in 2016, primarily due to 4% and 5% increases in container volume and higher average sell rates to customers. Ocean freight and ocean services expenses increased 14% and 16%, respectively, for the three and nine-month periods ended September 30, 2017, due to increased volumes and higher average buy rates as overall market demand increased and carriers managed available capacity.

Ocean freight and ocean services net revenues increased 12% and 4%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods in 2016. The largest component of our ocean freight net revenue was derived from ocean freight consolidation, which represented 46% and 48% of ocean freight net revenue for the nine-month periods ended September 30, 2017 and 2016, respectively.

Ocean freight consolidation net revenues increased 18% in the third quarter of 2017, as compared with the same period in 2016, due primarily to a 15% increase in net revenue per container and a 4% increase in volume. In the third quarter of 2016, net revenue per container was negatively affected by the bankruptcy of a large ocean carrier, which resulted in a spike in buy rates. Ocean freight consolidation net revenues decreased 2% for the nine-month period ended September 30, 2017, as compared with the same period in 2016. Decreases in net revenue per container in the first half of 2017 were largely offset by 5% volume growth and the increases in net revenue per container in the third quarter. Direct ocean freight forwarding net revenues decreased 3% in the third quarter of 2017, primarily due to increased costs, principally in North Asia and North America. Direct ocean forwarding net revenues increased 3% for the nine-month period ended September 30, 2017, as compared with the same period in 2016, due to higher volumes. Order management net revenues increased 19% and 15%, respectively, for the three and nine-month periods ended September 30, 2017, mostly resulting from higher volumes with new and existing customers primarily in North Asia.

North America ocean freight and ocean services net revenues increased 9% and remained flat, respectively, for the three and nine-month periods ended September 30, 2017, primarily due to an improvement in import margins during the third quarter that offset margin declines during the first half of 2017. Europe net revenues increased 8% in the third quarter due principally to higher average sell rates. Europe net revenues decreased 3% in the first nine months of 2017 as the increases in average buy rates during the nine-month period of 2017 were partially offset by the improvement in average sell rates in the third quarter. South Asia net revenues increased 12% and remained flat, respectively, for the three and nine-month periods ended September 30, 2017, due primarily to higher order management volumes and higher net revenue per container during the third quarter of 2017. North Asia net revenues increased 19% and 11% in the three and nine-month periods ended September 30, 2017, respectively, due to increases in order management and direct ocean forwarding, resulting from higher volumes, and a third quarter increase in ocean consolidation net revenues, driven by higher volumes and net revenue per container.

We expect that pricing volatility will continue as customers solicit bids and carriers adapt to changing market conditions, new alliances and liquidity challenges. These conditions could result in lower margins.

Customs brokerage and other services:

Customs brokerage and other services revenues increased 13% and 10%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods in 2016, primarily as a result of higher volumes in both customs brokerage and road freight services. Customs brokerage and other services expenses increased 15% and 13%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods in 2016, principally as a result of higher volumes.

Customs brokerage and other services net revenues increased 11% and 8%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods in 2016, primarily as a result of an increase in customs brokerage and road freight volumes, particularly in North America. Customers continue to seek out customs brokers, such as Expeditors, with sophisticated computerized capabilities critical to an overall logistics management program, including rapid responses to changes in the regulatory and security environment.

North America net revenues increased 12% and 10%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods for 2016, primarily as a result of higher volumes in customs brokerage and road freight services. Europe net revenues increased 12% and 9%, respectively, in the third quarter and first nine months of 2017 primarily due to higher customs brokerage and road freight services net revenues.

Overhead expenses:

Salaries and related costs increased 10% and 7%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods in 2016, due principally to an increase in the number of employees, primarily in North America, Europe, and South Asia, higher base salaries and benefits, higher share-based compensation expense and increased bonuses from higher operating income. The number of employees increased primarily to support the volume growth in our business operations and our continuing investments in information systems.

Historically, the relatively consistent relationship between salaries and net revenues 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 a direct alignment between corporate performance and shareholder interests. Bonuses to field and executive management for the nine-month period ended September 30, 2017 were down 1% while operating income increased 1%. In 2017, we reduced senior executive management bonus pool allocations by 6% to help fund expansion of our strategic growth initiatives. Our management compensation programs have always been incentive-based and performance driven. Salaries and related costs as a percentage of revenues was 53% for both of the three-month periods ended September 30, 2017 and 2016 and increased 1% to 55% for the nine-month period ended September 30, 2017, as compared to the same period in 2016.

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. Due to the nature of our services, it has a short operating cycle. 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 this short operating cycle, 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, net revenues and net earnings are a result of the incentives inherent in our compensation programs.

Other overhead expenses increased 7% and 4%, respectively, for the three and nine-month periods ended September 30, 2017, as compared with the same periods in 2016. We continue to invest in additional technology and facilities, which resulted in higher rent and facilities expenses, technology-related fees and consulting costs. These increases were offset by lower claims, the recovery of certain legal and related costs totaling $8 million for the year-to-date period ended September 30, 2017 compared to $5 million in the same period in 2016 and the favorable resolution of an indirect tax contingency of $6 million in the second quarter of 2017. 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. Other overhead expenses as a percentage of net revenues for the three and nine-month periods ended September 30, 2017 remained comparable with the same periods in 2016.

Income tax expense:

We pay income taxes in the United States and other jurisdictions. Our consolidated effective income tax rate was 36.7% and 37.1%, respectively, for the three and nine-month periods ended September 30, 2017, and 36.9% and 37.0% for the same periods in 2016. Our effective tax rate is subject to variation and the rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on the effective tax rate is greater when pre-tax income is lower.

17

Currency and Other Risk Factors

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 nine months ended September 30, 2017 and 2016 was insignificant. We had no foreign currency derivatives outstanding at September 30, 2017 and December 31, 2016. During the three and nine-month periods ended September 30, 2017, total net foreign currency losses were approximately $3 million and $12 million, respectively. During the three and nine-month periods ended September 30, 2016, net foreign currency gains were less than $1 million and net foreign currency losses were $1 million, respectively.

International air and ocean freight forwarding and customs brokerage are intensively 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 could result in reduced revenues, reduced margins, higher operating costs 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.

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 and nine months ended September 30, 2017 was $85 million and $362 million, respectively, as compared with $116 million and $457 million for the same periods in 2016. The decreases of $31 million and $95 million in the third quarter and first nine months of 2017, respectively, are primarily due to increases in accounts receivable from higher revenues, partially offset by growth in accounts payable and accrued expenses and higher earnings. At September 30, 2017, working capital was $1,443 million, including cash and cash equivalents of $1,033 million. We had no long-term debt at September 30, 2017. 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 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. 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.

Cash used in investing activities for the three and nine months ended September 30, 2017 was $35 million and $68 million, respectively, as compared with $11 million and $35 million in the same periods of 2016. We had capital expenditures of $34 million and $68 million for the three and nine-month periods ended September 30, 2017, as compared with $13 million and $40 million for the same periods in 2016, respectively. Capital expenditures in the three and nine months ended September 30, 2017 related primarily to building construction and continuing investments in technology, office and warehouse furniture and equipment and building and leasehold improvements. Occasionally, we elect to purchase buildings to house staff and to facilitate the staging of customers’ freight. In 2016, we completed a land acquisition in Europe. Additional expenditures are expected to be made in 2017 and 2018 in connection with the construction of a building on this land. Total anticipated capital expenditures in 2017 are currently estimated to be $100 million. This includes routine capital expenditures, including the construction of the building in Europe, plus additional real estate development.

Cash used in financing activities during the three and nine months ended September 30, 2017 was $137 million and $254 million, respectively, as compared with $44 million and $193 million for the same periods in 2016. 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 nine months ended September 30, 2017, we used cash to repurchase 3.6 million and 6.1 million shares, respectively, to reduce the number of total outstanding shares, compared to 2.0 million and 5.4 million shares in the same periods in 2016.

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 maintain international unsecured bank lines of credit. At September 30, 2017, we were contingently liable for $71 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 books 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.

At September 30, 2017, our contractual obligations are as follows:

			Payments due by period
In thousands	Total		Less than 1 year	1 - 3 years	3 - 5 years	After  5 years
Contractual Obligations:
Operating leases	$	252,276	77,266	92,184	49,135	33,691
Unconditional purchase obligations	62,481		62,481	—	—	—
Construction, equipment and technology purchase obligations	33,445		26,996	6,449	—	—
Total contractual cash obligations	$	348,202	166,743	98,633	49,135	33,691

We typically enter into short-term unconditional purchase obligations with asset-based providers reserving space on a guaranteed basis. The pricing of these obligations varies to some degree with market conditions. We only enter into agreements that management believes we can fulfill.

Our foreign subsidiaries regularly remit dividends to the U.S. parent company after evaluating their working capital requirements and needs to finance local capital expenditures. In some cases, our ability to repatriate funds from foreign operations may be subject to foreign exchange controls. At September 30, 2017, cash and cash equivalent balances of $436 million were held by our non-United States subsidiaries, of which $50 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 and, accordingly, a deferred tax liability has been accrued for all undistributed earnings, net of foreign related tax credits that are available to be repatriated.

18

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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:

Foreign Exchange Risk

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 are in 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 nine months ended September 30, 2017, would have had the effect of raising operating income approximately $35 million. An average 10% strengthening of the U.S. dollar, for the same period, would have the effect of reducing operating income approximately $29 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 nine months ended September 30, 2017 and 2016 was insignificant. During the three and nine-month periods ended September 30, 2017, total net foreign currency losses were approximately $3 million and $12 million, respectively. During the three and nine-month periods ended September 30, 2016, net foreign currency gains were less than $1 million and net foreign currency losses were $1 million, respectively. We had no foreign currency derivatives outstanding at September 30, 2017 and December 31, 2016. We instead follow a policy of accelerating international currency settlements to manage foreign exchange risk relative to intercompany billings. As of September 30, 2017, we had approximately $17 million of net unsettled intercompany transactions. The majority of intercompany billings are resolved within 30 days.

Interest Rate Risk

At September 30, 2017, we had cash and cash equivalents of $1,033 million, of which $648 million was invested at various short-term market interest rates. We had no long-term debt at September 30, 2017. A hypothetical change in the interest rate of 10 basis points at September 30, 2017 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 third quarter of 2017.

Item 4. Controls and Procedures

Evaluation of Controls and Procedures

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.

Changes in Internal Controls

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.

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.

In the next two fiscal years, we will adopt two significant new accounting standards related to revenue recognition and accounting for leases. The adoption of these accounting standards will require changes to existing processes and systems that are an integral part of our internal controls and will require testing for operating effectiveness.

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.

19

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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 September 30, 2017, 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.

Item 1A. Risk Factors

There have been no material changes in Expeditors' risk factors from those disclosed in our annual report on Form 10-K filed on February 23, 2017 other than the following:

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

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
July 1-31, 2017	—	$	—	—	14,683,556
August 1-31, 2017	1,552,335	55.34		1,552,335	13,101,686
September 1-30, 2017	2,057,379	56.80		2,057,379	10,982,748
Total	3,609,714	$	56.18	3,609,714	10,982,748

In November 1993, Expeditors' Board of Directors authorized a Non-Discretionary Stock Repurchase Plan for the purpose of repurchasing our common stock in the open market with the proceeds received from the exercise of stock options. On February 9, 2009, the Plan was amended to increase the authorization to repurchase up to 40 million shares of our common stock. This authorization has no expiration date. This plan was initially disclosed in our annual report on Form 10-K filed on March 31, 1995. In the third quarter of 2017, 1,251,635 shares of common stock were repurchased under the Non-Discretionary Stock Repurchase Plan.

In November 2001, under a Discretionary Stock Repurchase Plan, Expeditors' Board of Directors authorized the repurchase of our common stock in the open market to reduce the issued and outstanding stock down to 200 million shares. In February 2014, the Board of Directors authorized repurchases down to 190 million shares of common stock. In February and August 2015 and May 2016, the Board of Directors further authorized repurchases down to 188 million, 180 million and 170 million, respectively. 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. In the third quarter of 2017, 2,358,079 shares of common stock were repurchased under the Discretionary Stock Repurchase Plan.

20

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a) Not applicable

(b) Not applicable

21

Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K.

Exhibit Number	Description
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	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

22

SIGNATURES

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.

	EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
November 7, 2017	/s/ JEFFREY S. MUSSER
	Jeffrey S. Musser, President, Chief Executive Officer and Director
November 7, 2017	/s/ BRADLEY S. POWELL
	Bradley S. Powell, Senior Vice President and Chief Financial Officer

23

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Jeffrey S. Musser, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Expeditors International of Washington, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2017

/S/ JEFFREY S. MUSSER

Jeffrey S. Musser

President, Chief Executive Officer and Director

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Bradley S. Powell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Expeditors International of Washington, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2017

/S/ BRADLEY S. POWELL

Bradley S. Powell

Senior Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Expeditors International of Washington, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Jeffrey S. Musser, President, Chief Executive Officer and Director, and Bradley S. Powell, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 7, 2017	/S/ JEFFREY S. MUSSER
	Jeffrey S. Musser President, Chief Executive Officer and Director
November 7, 2017	/S/ BRADLEY S. POWELL
	Bradley S. Powell Senior Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 03, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	EXPEDITORS INTERNATIONAL OF WASHINGTON INC
Entity Central Index Key	0000746515
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Trading Symbol	EXPD
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		177,702,850

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 1,033,444	$ 974,435
Accounts receivable, less allowance for doubtful accounts of $11,217 at September 30, 2017 and $9,247 at December 31, 2016	1,349,854	1,190,130
Other	135,623	54,014
Total current assets	2,518,921	2,218,579
Property and equipment, less accumulated depreciation and amortization of $413,219 at September 30, 2017 and $406,652 at December 31, 2016	513,070	536,572
Goodwill	7,927	7,927
Other assets, net	28,963	27,793
Total assets	3,068,881	2,790,871
Current Liabilities:
Accounts payable	836,055	726,571
Accrued expenses, primarily salaries and related costs	216,146	185,502
Federal, state and foreign income taxes	23,853	17,858
Total current liabilities	1,076,054	929,931
Deferred Federal and state income taxes	11,746	13,727
Commitments and contingencies
Shareholders' Equity:
Preferred stock, none issued	0	0
Common stock, par value $0.01 per share. Issued and outstanding 177,559 shares at September 30, 2017 and 179,857 shares at December 31, 2016	1,776	1,799
Additional paid-in capital	1,464	2,642
Retained earnings	2,053,723	1,944,789
Accumulated other comprehensive loss	(78,960)	(104,592)
Total shareholders’ equity	1,978,003	1,844,638
Noncontrolling interest	3,078	2,575
Total equity	1,981,081	1,847,213
Total liabilities and equity	$ 3,068,881	$ 2,790,871

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 11,217	$ 9,247
Property and equipment, accumulated depreciation	$ 413,219	$ 406,652
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	177,559	179,857
Common stock, shares outstanding	177,559	179,857

XML

Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Airfreight services	$ 735,164	$ 621,566	$ 2,022,577	$ 1,764,512
Ocean freight and ocean services	563,386	495,460	1,585,730	1,414,344
Customs brokerage and other services	503,616	445,368	1,411,270	1,277,174
Total revenues	1,802,166	1,562,394	5,019,577	4,456,030
Operating Expenses:
Airfreight services	547,595	444,359	1,490,417	1,236,555
Ocean freight and ocean services	411,061	359,991	1,163,051	1,006,710
Customs brokerage and other services	244,368	212,785	675,729	597,320
Salaries and related costs	319,050	291,204	930,159	868,091
Rent and occupancy costs	30,533	27,091	87,826	81,029
Depreciation and amortization	12,272	11,882	36,241	34,853
Selling and promotion	10,608	10,134	32,476	29,817
Other	39,784	37,685	102,429	103,702
Total operating expenses	1,615,271	1,395,131	4,518,328	3,958,077
Operating income	186,895	167,263	501,249	497,953
Other Income (Expense):
Interest income	3,444	2,924	9,565	8,593
Other, net	96	925	2,584	3,407
Other income (expense), net	3,540	3,849	12,149	12,000
Earnings before income taxes	190,435	171,112	513,398	509,953
Income tax expense	69,829	63,163	190,470	188,518
Net earnings	120,606	107,949	322,928	321,435
Less net earnings attributable to the noncontrolling interest	343	368	550	1,218
Net earnings attributable to shareholders	$ 120,263	$ 107,581	$ 322,378	$ 320,217
Diluted earnings attributable to shareholders per share	$ 0.66	$ 0.59	$ 1.77	$ 1.75
Basic earnings attributable to shareholders per share	0.67	0.59	1.79	1.76
Common Stock, Dividends, Per Share, Cash Paid	$ 0.00	$ 0.00	$ 0.42	$ 0.40
Weighted average diluted shares outstanding	181,788	182,692	181,951	182,958
Weighted average basic shares outstanding	179,416	181,177	179,827	181,645

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net earnings	$ 120,606	$ 107,949	$ 322,928	$ 321,435
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax of $4,128 and $202 for the three months ended September 30, 2017 and 2016 and $14,019 and $223 for the nine months ended September 30, 2017 and 2016	7,489	260	25,585	(457)
Other comprehensive income (loss)	7,489	260	25,585	(457)
Comprehensive income	128,095	108,209	348,513	320,978
Less comprehensive income attributable to the noncontrolling interest	285	260	503	1,167
Comprehensive income attributable to shareholders	$ 127,810	$ 107,949	$ 348,010	$ 319,811

XML

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Other Comprehensive Income (Loss), Tax, Parenthetical Disclosures [Abstract]
Foreign currency translation adjustments, tax	$ 4,128	$ 202	$ 14,019	$ (223)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Operating Activities:
Net earnings	$ 120,606	$ 107,949	$ 322,928	$ 321,435
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses on accounts receivable	1,741	1,321	3,187	2,461
Deferred income tax (benefit) expense	(28,854)	(1,439)	(16,000)	2,342
Stock compensation expense	11,210	10,476	39,036	34,264
Depreciation and amortization	12,272	11,882	36,241	34,853
Other, net	377	11	(148)	41
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(126,102)	(58,279)	(123,790)	6,087
Increase in accounts payable and accrued expenses	61,833	38,070	96,132	74,148
Increase (decrease) in income taxes payable, net	38,149	7,197	10,814	(16,612)
Increase in other current assets	(5,872)	(1,395)	(6,147)	(2,089)
Net cash from operating activities	85,360	115,793	362,253	456,930
Investing Activities:
Purchase of property and equipment	(34,462)	(12,659)	(67,603)	(39,973)
Other, net	(261)	1,617	(892)	5,472
Net cash from investing activities	(34,723)	(11,042)	(68,495)	(34,501)
Financing Activities:
Proceeds from issuance of common stock	65,915	57,522	162,781	147,645
Repurchases of common stock	(202,776)	(101,690)	(340,736)	(268,097)
Dividends paid	0	0	(75,726)	(73,000)
Net cash from financing activities	(136,861)	(44,168)	(253,681)	(193,452)
Effect of exchange rate changes on cash and cash equivalents	4,758	1,853	18,932	5,927
(Decrease) increase in cash and cash equivalents	(81,466)	62,436	59,009	234,904
Cash and cash equivalents at beginning of period	1,114,910	980,264	974,435	807,796
Cash and cash equivalents at end of period	1,033,444	1,042,700	1,033,444	1,042,700
Taxes Paid:
Income taxes	$ 58,257	$ 58,696	$ 190,911	$ 205,049

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

A. Basis of Presentation

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, 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 to 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 23, 2017.

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 reclassified to conform to the 2017 presentation.

B. Accounts Receivable

The Company maintains an allowance for doubtful accounts, which is reviewed at least monthly for estimated losses resulting from the inability of its customers to make required payments for services and advances. Additional allowances may be necessary in the future if the ability of customers to pay deteriorates. The Company has recorded an allowance for doubtful accounts in the amounts of $11,217 as of September 30, 2017 and $9,247 as of December 31, 2016. Additions and write-offs have not been significant in the periods presented.

C. Use of Estimates

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 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 liabilities for the portion of the related exposure that the Company has self-insured, accrual of various tax liabilities, accrual of loss contingencies and calculation of share-based compensation expense. Actual results could differ from those estimates.

XML

Share-Based Compensation

9 Months Ended

Sep. 30, 2017

Share-based Compensation [Abstract]

Share-Based Compensation

Share-Based Compensation

The Company has historically granted the majority of its share-based awards during the second quarter of each fiscal year. On May 2, 2017, shareholders approved the 2017 Omnibus Incentive Plan (2017 Plan), which made available 2,500 shares of the Company's common stock in aggregate to be issued under any award type allowed by the 2017 Plan. In the nine-month period ended September 30, 2017, the Company awarded 583 restricted stock units (RSU) under the 2017 Plan to certain employees at a weighted-average grant date fair value of $54.04. The RSU vest annually over 3 years based on continued employment and are settled upon vesting in shares of the Company's common stock on a one-for-one basis. The value of an RSU grant is based on the Company's stock price on the date of grant. Additionally, in the second quarter of 2017 and 2016, respectively, 38 and 41 fully vested shares were granted to non-employee directors.

The Company also awarded 23 performance stock units (PSU) under the 2017 Plan. The PSU include performance conditions and a time-based vesting component. The final number of PSU will be determined using an adjustment factor of up to two times each PSU granted, depending on the degree of achievement of the designated performance targets. If the minimum performance thresholds are not achieved, no shares will be issued. Each PSU will convert to one share of the Company's common stock upon vesting.

RSU and PSU granted under the 2017 Plan have dividend equivalent rights, which entitle holders of RSU and PSU to the same dividend value per share as holders of common stock. Dividend equivalent rights are subject to the same vesting and other terms and conditions as the corresponding unvested RSU and PSU and are accumulated and paid in shares when the underlying awards vest.

Under the 2016 Stock Option Plan, 2,973 options were granted in the nine months ended September 30, 2016, vesting over 3 years from the date of grant. The Company does not plan to grant stock options in 2017.

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 and 682 and 703 were issued in the nine-month periods ended September 30, 2017 and 2016, respectively. The fair value of the employee stock purchase rights granted was $11.69 and $10.99 per share for the quarters ended September 30, 2017 and 2016, respectively.

The Company recognizes stock compensation expense based on an estimate of the fair value of awards granted to employees and directors under the Company’s omnibus incentive, stock option, director restricted stock and employee stock purchase rights plans. This expense, adjusted for expected forfeitures, is recognized in net earnings on a straight-line basis over the service periods as salaries and related expenses. RSU awards 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. Approximately $4 million of stock compensation expense was recognized in the second quarter of 2017 for RSU grants meeting retirement eligibility criteria.

Beginning on January 1, 2017, the Company adopted accounting guidance requiring that, prospectively, excess tax benefits and deficiencies be recorded in income tax expense for vesting of RSU, stock option exercises, cancellations and disqualifying dispositions of employee stock purchase plan shares. Also, the Company has elected to continue to estimate forfeitures expected to occur in determining compensation cost to be recognized in each period.

Total stock compensation expense and the total related tax benefit recognized are as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Stock compensation expense	$	11,210	$	10,476	$	39,036	$	34,264
Recognized tax benefit	$	2,311	$	2,149	$	8,187	$	5,928

XML

Basic and Diluted Earnings per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Basic and Diluted Earnings per Share

Basic and Diluted Earnings per Share

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:

	Three months ended
	September 30,
(Amounts in thousands, except per share amounts)	Net earnings attributable to shareholders		Weighted average shares	Earnings per share
2017
Basic earnings attributable to shareholders	$	120,263	179,416	$	0.67
Effect of dilutive potential common shares	—		2,372	—
Diluted earnings attributable to shareholders	$	120,263	181,788	$	0.66
2016
Basic earnings attributable to shareholders	$	107,581	181,177	$	0.59
Effect of dilutive potential common shares	—		1,515	—
Diluted earnings attributable to shareholders	$	107,581	182,692	$	0.59

	Nine months ended
	September 30,
(Amounts in thousands, except per share amounts)	Net earnings attributable to shareholders		Weighted average shares	Earnings per share
2017
Basic earnings attributable to shareholders	$	322,378	179,827	$	1.79
Effect of dilutive potential common shares	—		2,124	—
Diluted earnings attributable to shareholders	$	322,378	181,951	$	1.77
2016
Basic earnings attributable to shareholders	$	320,217	181,645	$	1.76
Effect of dilutive potential common shares	—		1,313	—
Diluted earnings attributable to shareholders	$	320,217	182,958	$	1.75

The following potential common shares have been excluded from the computation of diluted earnings per share because the effect would have been antidilutive:

	Three months ended		Nine months ended
	September 30,		September 30,
	2017	2016	2017	2016
Shares	1	8,646	1,233	9,516

XML

Components of Equity

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Components of Equity

Components of Equity

The components of equity for the nine months ended September 30,2017 and 2016 are as follows:

	Shareholders’ equity			Noncontrolling interest		Total equity
Balance at December 31, 2016	$	1,844,638		2,575		1,847,213
Exercise of stock options	134,014			—		134,014
Issuance of shares under stock purchase plan	28,767			—		28,767
Shares repurchased under provisions of stock repurchase plans	(340,736		)	—		(340,736	)
Stock compensation expense	39,036			—		39,036
Net earnings	322,378			550		322,928
Other comprehensive income (loss)	25,632			(47	)	25,585
Dividends paid ($0.42 per share)	(75,726		)	—		(75,726	)
Balance at September 30, 2017	$	1,978,003		3,078		1,981,081
Balance at December 31, 2015	$	1,691,993		2,683		1,694,676
Exercise of stock options	119,509			—		119,509
Issuance of shares under stock purchase plan	28,136					28,136
Shares repurchased under provisions of stock repurchase plans	(268,097		)	—		(268,097	)
Stock compensation expense	34,264			—		34,264
Tax benefits from stock plans, net	(2,533		)	—		(2,533	)
Net earnings	320,217			1,218		321,435
Other comprehensive loss	(406		)	(51	)	(457	)
Dividends paid ($0.40 per share)	(73,000		)	—		(73,000	)
Balance at September 30, 2016	$	1,850,083		3,850		1,853,933

The Company has a Non-Discretionary Stock Repurchase Plan to repurchase shares from the proceeds of stock option exercises and employee stock purchases. During the nine-month periods ended September 30, 2017 and 2016, 2,902 and 2,822 shares were repurchased at an average price of $55.58 and $49.84 per share, respectively.

The Company also has a Discretionary Stock Repurchase Plan approved by the Board of Directors that authorizes management to reduce issued and outstanding stock down to 170 million shares of common stock. During the nine-month periods ended September 30, 2017 and 2016, 3,189 and 2,579 shares were repurchased at an average price of $56.26 and $49.41 per share, respectively.

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

On May 2, 2017, the Board of Directors declared a semi-annual dividend of $0.42 per share payable on June 15, 2017 to shareholders of record as of June 1, 2017. On May 3, 2016, the Board of Directors declared a semi-annual dividend of $0.40 per share payable on June 15, 2016 to shareholders of record as of June 1, 2016.

Subsequent to the end of the third quarter, on November 7, 2017, the Board of Directors declared a semi-annual dividend of $0.42 per share payable on December 15, 2017 to shareholders of record as of December 1, 2017.

XML

Assets Held for Sale Assets Held for Sale

9 Months Ended

Sep. 30, 2017

Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]

Assets Held for Sale

Note 5. Assets Held for Sale

In January 2017, the Company formally approved a plan to sell land and buildings located in Miami, Florida. The decision to sell these assets was largely based upon changes in local operational requirements and the Company's intended use of the property. The net book value of the property assets is $80 million, and is reported within the United States segment. The Company continues to market the land and buildings at a selling price which, after selling costs, is expected to exceed the net book value. As of September 30, 2017, these assets are being reported as held for sale and are classified in other current assets.

XML

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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.

Cash and cash equivalents consist of the following:

	September 30, 2017			December 31, 2016
	Cost		Fair Value	Cost	Fair Value
Cash and Cash Equivalents:
Cash and overnight deposits	$	385,432	385,432	406,787	406,787
Corporate commercial paper	613,433		613,825	507,777	507,889
Time deposits	34,579		34,579	59,871	59,871
Total cash and cash equivalents	$	1,033,444	1,033,836	974,435	974,547

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).

XML

Commitments

9 Months Ended

Sep. 30, 2017

Commitments [Abstract]

Commitments Disclosure

Commitments

The Company generally enters into short-term, unconditional purchase obligations with asset-based providers reserving space on a guaranteed basis. The pricing of these obligations varies to some degree with market conditions. Historically, the Company has met these obligations in the normal course of business within one year. Purchase obligations outstanding as of September 30, 2017 totaled $62 million.

Additionally, the Company occupies offices and warehouse facilities under terms of operating leases expiring up to 2028. At September 30, 2017, future minimum annual lease payments under all noncancelable leases are as follows:

2017	$	16,984
2018	65,813
2019	53,209
2020	41,565
2021	27,696
Thereafter	47,009
	$	252,276

XML

Contingencies

9 Months Ended

Sep. 30, 2017

Loss Contingency [Abstract]

Contingencies

Contingencies

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 September 30, 2017, 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.

XML

Business Segment Information

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business Segment Information

Business Segment Information

The Company is organized functionally in geographic operating segments. Accordingly, management focuses its attention on revenues, net revenues¹, operating income, identifiable assets, capital expenditures, depreciation and amortization 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.

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

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Three months ended September 30, 2017:
Revenues from unaffiliated customers	$	476,575	65,544	24,181	686,915	170,225	273,606	105,120	—		1,802,166
Transfers between geographic areas	26,888		2,782	3,679	5,253	5,681	10,302	5,318	(59,903	)	—
Total revenues	$	503,463	68,326	27,860	692,168	175,906	283,908	110,438	(59,903	)	1,802,166
Net revenues1	$	257,030	30,664	14,710	138,667	41,411	85,390	29,956	1,314		599,142
Operating income	$	74,645	9,215	2,652	72,070	11,697	11,124	5,495	(3	)	186,895
Identifiable assets at period end	$	1,636,293	100,651	52,238	446,826	143,893	473,509	212,210	3,261		3,068,881
Capital expenditures	$	7,398	263	2,436	589	390	23,138	248	—		34,462
Depreciation and amortization	$	7,905	405	310	1,313	569	1,309	461	—		12,272
Equity	$	1,345,266	52,212	25,709	231,831	102,477	139,688	119,649	(35,751	)	1,981,081
Three months ended September 30, 2016:
Revenues from unaffiliated customers	$	423,362	56,747	21,592	590,622	154,156	228,256	87,659	—		1,562,394
Transfers between geographic areas	24,610		2,770	3,724	5,368	6,206	9,938	5,551	(58,167	)	—
Total revenues	$	447,972	59,517	25,316	595,990	160,362	238,194	93,210	(58,167	)	1,562,394
Net revenues1	$	229,773	30,211	14,063	124,251	42,711	74,888	29,363	(1	)	545,259
Operating income	$	69,457	6,200	3,328	59,682	14,045	7,018	7,534	(1	)	167,263
Identifiable assets at period end	$	1,410,287	95,390	56,192	480,587	117,333	388,543	237,104	8,788		2,794,224
Capital expenditures	$	8,319	720	139	739	319	2,127	296	—		12,659
Depreciation and amortization	$	7,566	369	328	1,404	594	1,116	505	—		11,882
Equity	$	1,145,293	41,542	37,765	293,383	87,926	129,989	150,395	(32,360	)	1,853,933

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Nine months ended September 30, 2017:
Revenues from unaffiliated customers	$	1,354,811	187,997	69,747	1,873,393	475,163	764,596	293,870	—		5,019,577
Transfers between geographic areas	79,356		8,246	11,073	15,139	16,520	29,288	15,316	(174,938	)	—
Total revenues	$	1,434,167	196,243	80,820	1,888,532	491,683	793,884	309,186	(174,938	)	5,019,577
Net revenues1	$	737,842	84,630	43,634	371,459	117,634	242,244	89,973	2,964		1,690,380
Operating income	$	191,256	26,583	8,349	183,515	37,434	36,189	17,928	(5	)	501,249
Identifiable assets at period end	$	1,636,293	100,651	52,238	446,826	143,893	473,509	212,210	3,261		3,068,881
Capital expenditures	$	19,492	1,066	3,648	2,492	1,172	38,717	1,016	—		67,603
Depreciation and amortization	$	23,389	1,163	930	3,995	1,656	3,707	1,401	—		36,241
Equity	$	1,345,266	52,212	25,709	231,831	102,477	139,688	119,649	(35,751	)	1,981,081
Nine months ended September 30, 2016:
Revenues from unaffiliated customers	$	1,248,923	165,527	62,825	1,605,343	442,464	680,035	250,913	—		4,456,030
Transfers between geographic areas	79,617		8,141	11,512	15,849	18,338	30,396	16,452	(180,305	)	—
Total revenues	$	1,328,540	173,668	74,337	1,621,192	460,802	710,431	267,365	(180,305	)	4,456,030
Net revenues1	$	683,331	88,404	42,264	357,159	128,486	227,068	88,745	(12	)	1,615,445
Operating income	$	184,876	23,091	11,016	176,621	48,090	31,109	23,162	(12	)	497,953
Identifiable assets at period end	$	1,410,287	95,390	56,192	480,587	117,333	388,543	237,104	8,788		2,794,224
Capital expenditures	$	25,234	1,476	941	2,502	1,325	6,386	2,109	—		39,973
Depreciation and amortization	$	22,264	1,113	869	4,111	1,649	3,402	1,445	—		34,853
Equity	$	1,145,293	41,542	37,765	293,383	87,926	129,989	150,395	(32,360	)	1,853,933

_______________________

¹Net revenues are a non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. The Company's management believes that net revenues are a better measure than total revenues when evaluating the Company's operating segment performance since total revenues earned as a freight consolidator include the carriers' charges for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by the Company. Net revenue is one of the Company's primary operational and financial measures and demonstrates the Company's ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings.

The following table presents the calculation of consolidated net revenues:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Total revenues	$	1,802,166	$	1,562,394	$	5,019,577	$	4,456,030
Expenses:
Airfreight services	547,595		444,359		1,490,417		1,236,555
Ocean freight and ocean services	411,061		359,991		1,163,051		1,006,710
Customs brokerage and other services	244,368		212,785		675,729		597,320
Net revenues	$	599,142	$	545,259	$	1,690,380	$	1,615,445

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation, Policy

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 to 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 23, 2017.

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.

Accounts Receivable, Policy

The Company maintains an allowance for doubtful accounts, which is reviewed at least monthly for estimated losses resulting from the inability of its customers to make required payments for services and advances. Additional allowances may be necessary in the future if the ability of customers to pay deteriorates. The Company has recorded an allowance for doubtful accounts in the amounts of $11,217 as of September 30, 2017 and $9,247 as of December 31, 2016. Additions and write-offs have not been significant in the periods presented.

Use of Estimates, Policy

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 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 liabilities for the portion of the related exposure that the Company has self-insured, accrual of various tax liabilities, accrual of loss contingencies and calculation of share-based compensation expense. Actual results could differ from those estimates.

Stock Plans, Policy

The Company recognizes stock compensation expense based on an estimate of the fair value of awards granted to employees and directors under the Company’s omnibus incentive, stock option, director restricted stock and employee stock purchase rights plans. This expense, adjusted for expected forfeitures, is recognized in net earnings on a straight-line basis over the service periods as salaries and related expenses. RSU awards 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.

New Accounting Pronouncements, Policy

Beginning on January 1, 2017, the Company adopted accounting guidance requiring that, prospectively, excess tax benefits and deficiencies be recorded in income tax expense for vesting of RSU, stock option exercises, cancellations and disqualifying dispositions of employee stock purchase plan shares. Also, the Company has elected to continue to estimate forfeitures expected to occur in determining compensation cost to be recognized in each period.

Earnings Per Share, Policy

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.

Cash Equivalents, Policy

All highly liquid investments with a maturity of three months or less at date of purchase are considered to be cash equivalents.

Segment Reporting, Policy

The Company is organized functionally in geographic operating segments. Accordingly, management focuses its attention on revenues, net revenues¹, operating income, identifiable assets, capital expenditures, depreciation and amortization 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.

XML

Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Share-based Compensation [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

Total stock compensation expense and the total related tax benefit recognized are as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Stock compensation expense	$	11,210	$	10,476	$	39,036	$	34,264
Recognized tax benefit	$	2,311	$	2,149	$	8,187	$	5,928

XML

Basic and Diluted Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

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

	Three months ended
	September 30,
(Amounts in thousands, except per share amounts)	Net earnings attributable to shareholders		Weighted average shares	Earnings per share
2017
Basic earnings attributable to shareholders	$	120,263	179,416	$	0.67
Effect of dilutive potential common shares	—		2,372	—
Diluted earnings attributable to shareholders	$	120,263	181,788	$	0.66
2016
Basic earnings attributable to shareholders	$	107,581	181,177	$	0.59
Effect of dilutive potential common shares	—		1,515	—
Diluted earnings attributable to shareholders	$	107,581	182,692	$	0.59

	Nine months ended
	September 30,
(Amounts in thousands, except per share amounts)	Net earnings attributable to shareholders		Weighted average shares	Earnings per share
2017
Basic earnings attributable to shareholders	$	322,378	179,827	$	1.79
Effect of dilutive potential common shares	—		2,124	—
Diluted earnings attributable to shareholders	$	322,378	181,951	$	1.77
2016
Basic earnings attributable to shareholders	$	320,217	181,645	$	1.76
Effect of dilutive potential common shares	—		1,313	—
Diluted earnings attributable to shareholders	$	320,217	182,958	$	1.75

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following potential common shares have been excluded from the computation of diluted earnings per share because the effect would have been antidilutive:

	Three months ended		Nine months ended
	September 30,		September 30,
	2017	2016	2017	2016
Shares	1	8,646	1,233	9,516

XML

Components of Equity (Tables)

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Schedule of Components of Equity Disclosure

The components of equity for the nine months ended September 30,2017 and 2016 are as follows:

	Shareholders’ equity			Noncontrolling interest		Total equity
Balance at December 31, 2016	$	1,844,638		2,575		1,847,213
Exercise of stock options	134,014			—		134,014
Issuance of shares under stock purchase plan	28,767			—		28,767
Shares repurchased under provisions of stock repurchase plans	(340,736		)	—		(340,736	)
Stock compensation expense	39,036			—		39,036
Net earnings	322,378			550		322,928
Other comprehensive income (loss)	25,632			(47	)	25,585
Dividends paid ($0.42 per share)	(75,726		)	—		(75,726	)
Balance at September 30, 2017	$	1,978,003		3,078		1,981,081
Balance at December 31, 2015	$	1,691,993		2,683		1,694,676
Exercise of stock options	119,509			—		119,509
Issuance of shares under stock purchase plan	28,136					28,136
Shares repurchased under provisions of stock repurchase plans	(268,097		)	—		(268,097	)
Stock compensation expense	34,264			—		34,264
Tax benefits from stock plans, net	(2,533		)	—		(2,533	)
Net earnings	320,217			1,218		321,435
Other comprehensive loss	(406		)	(51	)	(457	)
Dividends paid ($0.40 per share)	(73,000		)	—		(73,000	)
Balance at September 30, 2016	$	1,850,083		3,850		1,853,933

XML

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Schedule of Fair value of Cash and Cash Equivalents by Balance Sheet Grouping

Cash and cash equivalents consist of the following:

	September 30, 2017			December 31, 2016
	Cost		Fair Value	Cost	Fair Value
Cash and Cash Equivalents:
Cash and overnight deposits	$	385,432	385,432	406,787	406,787
Corporate commercial paper	613,433		613,825	507,777	507,889
Time deposits	34,579		34,579	59,871	59,871
Total cash and cash equivalents	$	1,033,444	1,033,836	974,435	974,547

XML

Commitments (Tables)

9 Months Ended

Sep. 30, 2017

Commitments [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

At September 30, 2017, future minimum annual lease payments under all noncancelable leases are as follows:

2017	$	16,984
2018	65,813
2019	53,209
2020	41,565
2021	27,696
Thereafter	47,009
	$	252,276

XML

Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

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

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Three months ended September 30, 2017:
Revenues from unaffiliated customers	$	476,575	65,544	24,181	686,915	170,225	273,606	105,120	—		1,802,166
Transfers between geographic areas	26,888		2,782	3,679	5,253	5,681	10,302	5,318	(59,903	)	—
Total revenues	$	503,463	68,326	27,860	692,168	175,906	283,908	110,438	(59,903	)	1,802,166
Net revenues1	$	257,030	30,664	14,710	138,667	41,411	85,390	29,956	1,314		599,142
Operating income	$	74,645	9,215	2,652	72,070	11,697	11,124	5,495	(3	)	186,895
Identifiable assets at period end	$	1,636,293	100,651	52,238	446,826	143,893	473,509	212,210	3,261		3,068,881
Capital expenditures	$	7,398	263	2,436	589	390	23,138	248	—		34,462
Depreciation and amortization	$	7,905	405	310	1,313	569	1,309	461	—		12,272
Equity	$	1,345,266	52,212	25,709	231,831	102,477	139,688	119,649	(35,751	)	1,981,081
Three months ended September 30, 2016:
Revenues from unaffiliated customers	$	423,362	56,747	21,592	590,622	154,156	228,256	87,659	—		1,562,394
Transfers between geographic areas	24,610		2,770	3,724	5,368	6,206	9,938	5,551	(58,167	)	—
Total revenues	$	447,972	59,517	25,316	595,990	160,362	238,194	93,210	(58,167	)	1,562,394
Net revenues1	$	229,773	30,211	14,063	124,251	42,711	74,888	29,363	(1	)	545,259
Operating income	$	69,457	6,200	3,328	59,682	14,045	7,018	7,534	(1	)	167,263
Identifiable assets at period end	$	1,410,287	95,390	56,192	480,587	117,333	388,543	237,104	8,788		2,794,224
Capital expenditures	$	8,319	720	139	739	319	2,127	296	—		12,659
Depreciation and amortization	$	7,566	369	328	1,404	594	1,116	505	—		11,882
Equity	$	1,145,293	41,542	37,765	293,383	87,926	129,989	150,395	(32,360	)	1,853,933

(in thousands)	UNITED STATES		OTHER NORTH AMERICA	LATIN AMERICA	NORTH ASIA	SOUTH ASIA	EUROPE	MIDDLE EAST, AFRICA AND INDIA	ELIMI- NATIONS		CONSOLI- DATED
Nine months ended September 30, 2017:
Revenues from unaffiliated customers	$	1,354,811	187,997	69,747	1,873,393	475,163	764,596	293,870	—		5,019,577
Transfers between geographic areas	79,356		8,246	11,073	15,139	16,520	29,288	15,316	(174,938	)	—
Total revenues	$	1,434,167	196,243	80,820	1,888,532	491,683	793,884	309,186	(174,938	)	5,019,577
Net revenues1	$	737,842	84,630	43,634	371,459	117,634	242,244	89,973	2,964		1,690,380
Operating income	$	191,256	26,583	8,349	183,515	37,434	36,189	17,928	(5	)	501,249
Identifiable assets at period end	$	1,636,293	100,651	52,238	446,826	143,893	473,509	212,210	3,261		3,068,881
Capital expenditures	$	19,492	1,066	3,648	2,492	1,172	38,717	1,016	—		67,603
Depreciation and amortization	$	23,389	1,163	930	3,995	1,656	3,707	1,401	—		36,241
Equity	$	1,345,266	52,212	25,709	231,831	102,477	139,688	119,649	(35,751	)	1,981,081
Nine months ended September 30, 2016:
Revenues from unaffiliated customers	$	1,248,923	165,527	62,825	1,605,343	442,464	680,035	250,913	—		4,456,030
Transfers between geographic areas	79,617		8,141	11,512	15,849	18,338	30,396	16,452	(180,305	)	—
Total revenues	$	1,328,540	173,668	74,337	1,621,192	460,802	710,431	267,365	(180,305	)	4,456,030
Net revenues1	$	683,331	88,404	42,264	357,159	128,486	227,068	88,745	(12	)	1,615,445
Operating income	$	184,876	23,091	11,016	176,621	48,090	31,109	23,162	(12	)	497,953
Identifiable assets at period end	$	1,410,287	95,390	56,192	480,587	117,333	388,543	237,104	8,788		2,794,224
Capital expenditures	$	25,234	1,476	941	2,502	1,325	6,386	2,109	—		39,973
Depreciation and amortization	$	22,264	1,113	869	4,111	1,649	3,402	1,445	—		34,853
Equity	$	1,145,293	41,542	37,765	293,383	87,926	129,989	150,395	(32,360	)	1,853,933

Schedule of Net Revenues Calculation

The following table presents the calculation of consolidated net revenues:

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Total revenues	$	1,802,166	$	1,562,394	$	5,019,577	$	4,456,030
Expenses:
Airfreight services	547,595		444,359		1,490,417		1,236,555
Ocean freight and ocean services	411,061		359,991		1,163,051		1,006,710
Customs brokerage and other services	244,368		212,785		675,729		597,320
Net revenues	$	599,142	$	545,259	$	1,690,380	$	1,615,445

XML

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 11,217	$ 9,247

XML

Share-Based Compensation - Additional Information (Detail) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended				9 Months Ended
	Sep. 30, 2017 $ / shares	Jun. 30, 2017 USD ($) shares	Sep. 30, 2016 $ / shares	Jun. 30, 2016 shares	Sep. 30, 2017 $ / shares shares	Sep. 30, 2016 shares	May 02, 2017 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Issued During Period, Shares, Employee Stock Purchase Plans					682	703
Omnibus Incentive Plan 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized							2,500
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					583
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares					$ 54.04
Number of common stock issued per unit based award upon vesting					1
Directors' Restricted Stock Plan 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		38		41
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					23
Number of common stock issued per unit based award upon vesting					1
Maximum Adjustment Factor					2
Minimum Adjustment Factor					0
Stock Option Plan 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures						2,973
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares	$ 11.69		$ 10.99
Retirement-Eligible Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock or Unit Expense | $		$ 4
Upper end | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period					3 years
Upper end | Stock Option Plan 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period						3 years

XML

Share-Based Compensation - Stock Compensation Expense and Total Related Tax Benefit Recognized (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock compensation expense	$ 11,210	$ 10,476	$ 39,036	$ 34,264
Recognized tax benefit	$ 2,311	$ 2,149	$ 8,187	$ 5,928

XML

Basic and Diluted Earnings per Share - Numerator and Denominator of the Basic and Diluted Per Share Computations for Earnings Attributable to Shareholders Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Earnings Attributable to Shareholders
Basic earnings attributable to shareholders	$ 120,263	$ 107,581	$ 322,378	$ 320,217
Diluted earnings attributable to shareholders	$ 120,263	$ 107,581	$ 322,378	$ 320,217
Weighted Average Shares
Weighted average basic shares outstanding	179,416	181,177	179,827	181,645
Effect of dilutive potential common shares	2,372	1,515	2,124	1,313
Weighted average diluted shares outstanding	181,788	182,692	181,951	182,958
Earnings Per Share
Basic earnings attributable to shareholders per share	$ 0.67	$ 0.59	$ 1.79	$ 1.76
Diluted earnings attributable to shareholders per share	$ 0.66	$ 0.59	$ 1.77	$ 1.75

XML

Basic and Diluted Earnings per Share - Shares Excluded from Computation of Diluted earnings Per Share (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Shares	1	8,646	1,233	9,516

XML

Components of Equity (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			$ 1,847,213	$ 1,694,676
Exercise of stock options			134,014	119,509
Issuance of shares under stock purchase plan			28,767	28,136
Shares repurchased under provisions of stock repurchase plans			(340,736)	(268,097)
Stock compensation expense			39,036	34,264
Tax benefits from stock plans, net				(2,533)
Net earnings	$ 120,606	$ 107,949	322,928	321,435
Other comprehensive income (loss)	7,489	260	25,585	(457)
Dividends paid			75,726	73,000
Ending Balance	1,981,081	1,853,933	1,981,081	1,853,933
Shareholders' Equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			1,844,638	1,691,993
Exercise of stock options			134,014	119,509
Issuance of shares under stock purchase plan			28,767	28,136
Shares repurchased under provisions of stock repurchase plans			(340,736)	(268,097)
Stock compensation expense			39,036	34,264
Tax benefits from stock plans, net				(2,533)
Net earnings			322,378	320,217
Other comprehensive income (loss)			25,632	(406)
Dividends paid			75,726	73,000
Ending Balance	1,978,003	1,850,083	1,978,003	1,850,083
Noncontrolling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			2,575	2,683
Net earnings			550	1,218
Other comprehensive income (loss)			(47)	(51)
Ending Balance	$ 3,078	$ 3,850	$ 3,078	$ 3,850

XML

Components Of Equity - Additional Information (Detail) - $ / shares shares in Thousands				9 Months Ended
	Nov. 07, 2017	May 02, 2017	May 03, 2016	Sep. 30, 2017	Sep. 30, 2016
Class of Stock [Line Items]
Date of declaration of dividends		May 02, 2017	May 03, 2016
Dividend declared per share		$ 0.42	$ 0.40
Date of dividend payment		Jun. 15, 2017	Jun. 15, 2016
Dividends payable to shareholders date of record		Jun. 01, 2017	Jun. 01, 2016
Non-Discretionary Plan
Class of Stock [Line Items]
Shares repurchased				2,902	2,822
Average price per share				$ 55.58	$ 49.84
Discretionary Plan
Class of Stock [Line Items]
Shares repurchased				3,189	2,579
Average price per share				$ 56.26	$ 49.41
Expected common stock shares issued and outstanding				170,000
Subsequent Event
Class of Stock [Line Items]
Date of declaration of dividends	Nov. 07, 2017
Dividend declared per share	$ 0.42
Date of dividend payment	Dec. 15, 2017
Dividends payable to shareholders date of record	Dec. 01, 2017

XML

Assets Held for Sale Assets Held for Sale (Detail) $ in Millions	Sep. 30, 2017 USD ($)
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]
Assets Held for Sale, Net Book Value, Current	$ 80

XML

Fair Value of Financial Instruments - Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total cash and cash equivalents	$ 1,033,444	$ 1,114,910	$ 974,435	$ 1,042,700	$ 980,264	$ 807,796
Cost
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total cash and cash equivalents	1,033,444		974,435
Cost | Cash and Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and overnight deposits	385,432		406,787
Corporate commercial paper	613,433		507,777
Time deposits	34,579		59,871
Fair Value | Cash and Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and overnight deposits	385,432		406,787
Corporate commercial paper	613,825		507,889
Time deposits	34,579		59,871
Total cash and cash equivalents	$ 1,033,836		$ 974,547

XML

Commitments - Additional Information (Details) $ in Millions	9 Months Ended
	Sep. 30, 2017 USD ($)
Commitments Disclosure [Line Items]
Unrecorded Unconditional Purchase Obligation	$ 62
Building
Commitments Disclosure [Line Items]
Lease Expiration Date	Dec. 31, 2028

XML

Commitments - Future Minimum Annual Lease Payments Under All Leases (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year	$ 16,984
Operating Leases, Future Minimum Payments, Due in Two Years	65,813
Operating Leases, Future Minimum Payments, Due in Three Years	53,209
Operating Leases, Future Minimum Payments, Due in Four Years	41,565
Operating Leases, Future Minimum Payments, Due in Five Years	27,696
Operating Leases, Future Minimum Payments, Due Thereafter	47,009
Operating Leases, Future Minimum Payments Due, Total	$ 252,276

XML

Business Segment Information - Financial Information Regarding Company's Operations by Geographic Area (Detail) - USD ($) $ in Thousands		3 Months Ended				9 Months Ended
		Sep. 30, 2017		Sep. 30, 2016		Sep. 30, 2017		Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Total revenues		$ 1,802,166		$ 1,562,394		$ 5,019,577		$ 4,456,030
Net revenues	[1]	599,142		545,259		1,690,380		1,615,445
Operating income		186,895		167,263		501,249		497,953
Identifiable assets at period end		3,068,881		2,794,224		3,068,881		2,794,224	$ 2,790,871
Capital expenditures		34,462		12,659		67,603		39,973
Depreciation and amortization		12,272		11,882		36,241		34,853
Equity		1,981,081		1,853,933		1,981,081		1,853,933	$ 1,847,213	$ 1,694,676
United States Segment
Segment Reporting Information [Line Items]
Total revenues		476,575		423,362		1,354,811		1,248,923
Other North America Segment
Segment Reporting Information [Line Items]
Total revenues		65,544		56,747		187,997		165,527
Latin America Segment
Segment Reporting Information [Line Items]
Total revenues		24,181		21,592		69,747		62,825
North Asia Segment
Segment Reporting Information [Line Items]
Total revenues		686,915		590,622		1,873,393		1,605,343
South Asia Segment
Segment Reporting Information [Line Items]
Total revenues		170,225		154,156		475,163		442,464
Europe Segment
Segment Reporting Information [Line Items]
Total revenues		273,606		228,256		764,596		680,035
Middle East Africa And India Segment
Segment Reporting Information [Line Items]
Total revenues		105,120		87,659		293,870		250,913
Geography Eliminations | United States Segment
Segment Reporting Information [Line Items]
Total revenues		26,888		24,610		79,356		79,617
Geography Eliminations | Other North America Segment
Segment Reporting Information [Line Items]
Total revenues		2,782		2,770		8,246		8,141
Geography Eliminations | Latin America Segment
Segment Reporting Information [Line Items]
Total revenues		3,679		3,724		11,073		11,512
Geography Eliminations | North Asia Segment
Segment Reporting Information [Line Items]
Total revenues		5,253		5,368		15,139		15,849
Geography Eliminations | South Asia Segment
Segment Reporting Information [Line Items]
Total revenues		5,681		6,206		16,520		18,338
Geography Eliminations | Europe Segment
Segment Reporting Information [Line Items]
Total revenues		10,302		9,938		29,288		30,396
Geography Eliminations | Middle East Africa And India Segment
Segment Reporting Information [Line Items]
Total revenues		5,318		5,551		15,316		16,452
Operating Segments | United States Segment
Segment Reporting Information [Line Items]
Total revenues		503,463		447,972		1,434,167		1,328,540
Net revenues	[1]	257,030		229,773		737,842		683,331
Operating income		74,645		69,457		191,256		184,876
Identifiable assets at period end		1,636,293		1,410,287		1,636,293		1,410,287
Capital expenditures		7,398		8,319		19,492		25,234
Depreciation and amortization		7,905		7,566		23,389		22,264
Equity		1,345,266		1,145,293		1,345,266		1,145,293
Operating Segments | Other North America Segment
Segment Reporting Information [Line Items]
Total revenues		68,326		59,517		196,243		173,668
Net revenues	[1]	30,664		30,211		84,630		88,404
Operating income		9,215		6,200		26,583		23,091
Identifiable assets at period end		100,651		95,390		100,651		95,390
Capital expenditures		263		720		1,066		1,476
Depreciation and amortization		405		369		1,163		1,113
Equity		52,212		41,542		52,212		41,542
Operating Segments | Latin America Segment
Segment Reporting Information [Line Items]
Total revenues		27,860		25,316		80,820		74,337
Net revenues	[1]	14,710		14,063		43,634		42,264
Operating income		2,652		3,328		8,349		11,016
Identifiable assets at period end		52,238		56,192		52,238		56,192
Capital expenditures		2,436		139		3,648		941
Depreciation and amortization		310		328		930		869
Equity		25,709		37,765		25,709		37,765
Operating Segments | North Asia Segment
Segment Reporting Information [Line Items]
Total revenues		692,168		595,990		1,888,532		1,621,192
Net revenues	[1]	138,667		124,251		371,459		357,159
Operating income		72,070		59,682		183,515		176,621
Identifiable assets at period end		446,826		480,587		446,826		480,587
Capital expenditures		589		739		2,492		2,502
Depreciation and amortization		1,313		1,404		3,995		4,111
Equity		231,831		293,383		231,831		293,383
Operating Segments | South Asia Segment
Segment Reporting Information [Line Items]
Total revenues		175,906		160,362		491,683		460,802
Net revenues	[1]	41,411		42,711		117,634		128,486
Operating income		11,697		14,045		37,434		48,090
Identifiable assets at period end		143,893		117,333		143,893		117,333
Capital expenditures		390		319		1,172		1,325
Depreciation and amortization		569		594		1,656		1,649
Equity		102,477		87,926		102,477		87,926
Operating Segments | Europe Segment
Segment Reporting Information [Line Items]
Total revenues		283,908		238,194		793,884		710,431
Net revenues	[1]	85,390		74,888		242,244		227,068
Operating income		11,124		7,018		36,189		31,109
Identifiable assets at period end		473,509		388,543		473,509		388,543
Capital expenditures		23,138		2,127		38,717		6,386
Depreciation and amortization		1,309		1,116		3,707		3,402
Equity		139,688		129,989		139,688		129,989
Operating Segments | Middle East Africa And India Segment
Segment Reporting Information [Line Items]
Total revenues		110,438		93,210		309,186		267,365
Net revenues	[1]	29,956		29,363		89,973		88,745
Operating income		5,495		7,534		17,928		23,162
Identifiable assets at period end		212,210		237,104		212,210		237,104
Capital expenditures		248		296		1,016		2,109
Depreciation and amortization		461		505		1,401		1,445
Equity		119,649		150,395		119,649		150,395
Intersegment Eliminations
Segment Reporting Information [Line Items]
Total revenues		(59,903)		(58,167)		(174,938)		(180,305)
Net revenues		1,314	[1]	(1)	[1]	2,964	[1]	(12)
Operating income		(3)		(1)		(5)		(12)
Identifiable assets at period end		3,261		8,788		3,261		8,788
Equity		$ (35,751)		$ (32,360)		$ (35,751)		$ (32,360)

[1] Net revenues are a non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. The Company's management believes that net revenues are a better measure than total revenues when evaluating the Company's operating segment performance since total revenues earned as a freight consolidator include the carriers' charges for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by the Company. Net revenue is one of the Company's primary operational and financial measures and demonstrates the Company's ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings.

XML

Business Segment Information - Net Revenues Calculation (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Segment Reporting [Abstract]
Total revenues		$ 1,802,166	$ 1,562,394	$ 5,019,577	$ 4,456,030
Expenses [Abstract]
Airfreight services		547,595	444,359	1,490,417	1,236,555
Ocean freight and ocean services		411,061	359,991	1,163,051	1,006,710
Customs brokerage and other services		244,368	212,785	675,729	597,320
Net revenues	[1]	$ 599,142	$ 545,259	$ 1,690,380	$ 1,615,445

[1] Net revenues are a non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. The Company's management believes that net revenues are a better measure than total revenues when evaluating the Company's operating segment performance since total revenues earned as a freight consolidator include the carriers' charges for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by the Company. Net revenue is one of the Company's primary operational and financial measures and demonstrates the Company's ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings.