Business Segment Information

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Business Segment Information

Note 8. Business Segment Information

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

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

		UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the three months ended September 30, 2021:
Revenues		$	1,134,096		116,404		54,303		1,690,381		538,780		564,810		221,777		(1,290	)		4,319,261
Directly related cost of transportation    and other expenses1		$	661,515		63,031		34,216		1,417,283		445,970		389,208		174,733		(466	)		3,185,490
Salaries and other operating expenses2		$	238,943		33,077		14,759		141,109		54,003		126,475		36,598		(830	)		644,134
Operating income		$	233,638		20,296		5,328		131,989		38,807		49,127		10,446		6			489,637
Identifiable assets at period end		$	3,417,496		256,638		110,406		1,558,109		457,615		990,123		328,671		(42,675	)		7,076,383
Capital expenditures		$	6,001		248		175		435		351		2,254		406		—			9,870
Equity		$	2,451,584		93,084		37,087		368,535		129,941		258,805		123,304		(41,748	)		3,420,592
For the three months ended September 30, 2020:
Revenues3		$	686,243		77,414		39,193		795,155		259,069		359,107		133,447		(915	)		2,348,713
Directly related cost of transportation    and other expenses1,3		$	379,586		44,196		23,361		632,858		192,175		242,384		100,301		(527	)		1,614,334
Salaries and other operating expenses2		$	197,749		25,325		12,359		81,876		39,926		96,658		28,925		(384	)		482,434
Operating income		$	108,908		7,893		3,473		80,421		26,968		20,065		4,221		(4	)		251,945
Identifiable assets at period end		$	2,336,071		163,943		76,173		689,525		231,771		642,124		228,423		(9,476	)		4,358,554
Capital expenditures		$	4,703		483		180		1,075		665		1,780		292		—			9,178
Equity		$	1,791,658		77,915		31,324		246,557		97,564		185,352		110,714		(36,611	)		2,504,473
	UNITED STATES			OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the nine months ended September 30, 2021:
Revenues3	$		3,007,053		311,986		146,148		4,208,811		1,306,264		1,576,092		574,469		(3,649	)		11,127,174
Directly related cost of transportation    and other expenses1,3	$		1,731,032		175,392		86,868		3,471,453		1,051,133		1,072,973		444,132		(1,576	)		8,031,407
Salaries and other operating expenses2	$		718,762		90,114		41,871		354,841		146,214		359,338		100,899		(2,069	)		1,809,970
Operating income	$		557,259		46,480		17,409		382,517		108,917		143,781		29,438		(4	)		1,285,797
Identifiable assets at period end	$		3,417,496		256,638		110,406		1,558,109		457,615		990,123		328,671		(42,675	)		7,076,383
Capital expenditures	$		11,931		434		300		1,192		1,462		7,908		1,573		—			24,800
Equity	$		2,451,584		93,084		37,087		368,535		129,941		258,805		123,304		(41,748	)		3,420,592
For the nine months ended September 30, 2020:
Revenues3	$		1,975,874		232,324		114,637		2,277,027		642,302		1,024,127		340,000		(2,733	)		6,603,558
Directly related cost of transportation    and other expenses1,3	$		1,108,164		130,300		69,828		1,792,933		463,690		692,872		248,088		(1,423	)		4,504,452
Salaries and other operating expenses2	$		631,396		74,320		36,220		236,480		109,018		274,269		80,063		(1,286	)		1,440,480
Operating income	$		236,314		27,704		8,589		247,614		69,594		56,986		11,849		(24	)		658,626
Identifiable assets at period end	$		2,336,071		163,943		76,173		689,525		231,771		642,124		228,423		(9,476	)		4,358,554
Capital expenditures	$		28,276		1,692		498		1,785		1,035		3,418		715		—			37,419
Equity	$		1,791,658		77,915		31,324		246,557		97,564		185,352		110,714		(36,611	)		2,504,473

¹ Directly related cost of transportation and other expenses totals operating expenses from airfreight services, ocean freight and ocean services and customs brokerage and other services as shown in the condensed consolidated statements of earnings.

² Salaries and other operating expenses totals salaries and related, rent and occupancy, depreciation and amortization, selling and promotion and other as shown in the condensed consolidated statements of earnings.

³ See Note 9 - Correction of Immaterial Errors.

The Company’s consolidated financial results in the three and nine months ended September 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In all quarters of 2021, the Company experienced strong volumes and high average sell and buy rates as a result of imbalances between demand and carrier capacity and continuing effects of disruptions in supply chains originating in measures to combat the pandemic in 2020.

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

These impacts are affecting all of the Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. For the three months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 32% and 27%, respectively, of the Company’s total revenues and 21% and 26%, respectively, of the total operating income. For the nine months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 30% and 28%, respectively, of the Company’s total revenues and 23% and 30%, respectively, of the total operating income.