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 include Chinese Yuan, Indian Rupee, Euro, Mexican Peso, Canadian Dollar, British Pound and Vietnamese Dong. Most of our subsidiaries operate in functional currencies other than the U.S. dollar. The translation of foreign subsidiaries' non-US denominated balance sheets and income statements into U.S. dollar for consolidated reporting, results in a cumulative translation adjustment to accumulated other comprehensive loss within shareholders' equity. Foreign exchange rate translation 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 six months ended June 30, 2026, would have had the effect of raising operating income by approximately $37 million. An average 10% strengthening of the U.S. dollar, for the same period, would have the effect of reducing operating income by approximately $30 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. Historically, derivative financial instruments have not been used to manage foreign currency risk. For the three and six months ended June 30, 2026, net foreign currency transactional losses were approximately $8 million and $6 compared to net foreign currency transactional losses of approximately $12 million and $17 million, respectively, during the same periods in 2025. The net impact of foreign exchange rate fluctuation on the translation of our foreign operations, as included in other comprehensive income, was income of $4 million and loss of $8 million, net of taxes, in the three months and six months ended June 30, 2026 and income of $33 million and $47 million, net of taxes, in the three and six months ended June 30, 2025, respectively. In lieu of the use of foreign currency derivatives, we instead follow a policy of accelerating international currency settlements to manage foreign exchange risk relative to intercompany billings. As of June 30, 2026, we had approximately $194 million of net unsettled intercompany transactions. The majority of intercompany billings are resolved within 30 days. 23 Interest Rate Risk At June 30, 2026, we had cash and cash equivalents of $1,031 million of which $372 million was invested at various short-term market interest rates. We had no long-term debt at June 30, 2026. A hypothetical change in the interest rate of 10 basis points at June 30, 2026 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 second quarter of 2026.