## 2002 compared with 2001 

Airfreight net revenues in 2002 increased 12% compared with 2001 primarily due to increased airfreight tonnages handled in 2002 as compared with 2001. Airfreight margins decreased approximately 2% during 2002 as compared with 2001 as a result of rate increases initiated by air carriers during the third and fourth quarters in response to excess air cargo demands associated with the west coast port disruptions. Efficient consolidations of dense and fluffy (volumetric) freight allowed the Company to optimize purchased transportation costs while still offering competitive rates to cus- tomers. The Company’s North American export airfreight net revenues decreased 2% in 2002 compared to 2001. Airfreight net revenues from the Far East and from Europe increased 22% and 12%, respectively, for 2002 compared with 2001. Airfreight rates on Far East to North American trade lanes, the Company’s most dominant lane, remained strong throughout 2002, and were particularly strong during the fourth quarter. 

Ocean freight and ocean services net revenues increased 18% in 2002 compared to 2001. Ocean freight demand remained strong throughout 2002. Ocean freight rates from the Far East, the Company’s largest trade lane fell throughout the year. Ocean freight volumes increased during the last half of 2002, despite a 10-day disruption in service at the ports located on the west coast of the United States. The aftermath of this disruption continued throughout the fourth quarter. Management believes that the Company’s continued strong performance through this work disruption is a signifi- cant indication of both the strength of the Company’s relationships with its vendors and the expertise of its staff. During 2002, management continued to expand market share, increase ocean tonnage, and increase net ocean freight revenues while offering competitive market rates to customers. Changes in the regulatory environment in the United States continued to create new opportunities for the Company’s NVOCC opera- tions to provide services to customers who had previously dealt directly with the ocean carriers. 

Margins decreased 1% in 2002 as compared with 2001 because the Company re- duced rates to increase volumes in response to an environment of falling prices which were a result of the overcapacity situation that existed in the ocean markets. The Com- pany continued its focus of offering competitive rates to customers at the retail level, while leveraging freight volumes to obtain favorable rates from carriers at the whole- sale level. Expeditors Cargo Management Systems (ECMS), a PC-based ocean freight consolidation management and purchase order tracking service, continued to be in- strumental in attracting new business. The Company’s North American export ocean freight net revenues increased 18% in 2002 compared to 2001. This increase was a result of the Company handling more ocean shipments moving from North America to 

