## Currency and Other Risk Factors 

International air/ocean freight forwarding and customs brokerage are intensively com- petitive and are expected to remain so for the foreseeable future. There are a large number of entities competing in the international logistics industry; however, the Company’s primary competition is confined to a relatively small number of companies within this group. While there is currently a marked trend within the industry toward consolidation into large firms with multinational offices and agency networks, regional and local broker/forwarders remain a competitive force. 

Historically, the primary competitive factors in the international logistics industry have been price and quality of service, including reliability, responsiveness, expertise, convenience, and scope of operations. The Company emphasizes quality service and believes that its prices are competitive with those of others in the industry. Customers have exhibited a trend towards more sophisticated and efficient procedures for the management of the logistics supply chain by embracing strategies such as just-in-time inventory management. Accordingly, sophisticated computerized customer service capabilities and a stable worldwide network have become significant factors in attract- ing and retaining customers. 

Developing these systems and a worldwide network has added a considerable indi- rect 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 world- wide network. As a result, there is a significant amount of consolidation currently taking place in the industry. Management expects that this trend toward consolidation will continue for the short- to medium-term. 

The nature of the Company’s worldwide operations necessitates the Company deal- ing with a multitude of currencies other than the U.S. Dollar. This results in the Company being exposed to the inherent risks of the international currency markets and governmental interference. Some of the countries where the Company maintains offices and/or agency relationships have strict currency control regulations which influence the Company’s ability to hedge foreign currency exposure. The Company tries to compensate for these exposures by accelerating international currency settle- ments among its offices or agents. The Company enters into foreign currency hedging transactions only in limited locations where there are regulatory or commercial limi- tations on the Company’s 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 avoid short-term exchange losses. Any such hedging activity during 2002, 2001 and 2000 was insignificant. Net foreign currency gains realized in 2002 

