Unique Logistics International (UNQL) Risk Analysis

Unique Logistics provides services within and between foreign countries on an increasing basis. Unique Logistics' business outside of the United States is subject to various risks, including: - changes in tariffs, trade restrictions, trade agreements, and taxation;         - difficulties in managing or overseeing foreign operations and agents;         - limitations on the repatriation of funds because of foreign exchange controls;         - different liability standards;         - intellectual property laws of countries that do not protect Unique Logistics' rights in its intellectual property, including, but not limited to, Unique Logistics' proprietary information systems, to the same extent as the laws of the United States;         - issues related to non-compliance with laws, rules, and regulations in the countries in which Unique Logistics operates, including the U.S. Foreign Corrupt Practices Act and similar regulations. Failure to comply could result in reputational harm, substantial penalties, and operational restrictions; and.         - global laws and regulations regarding the collection, use, processing and transfer of personal information may impact our services by imposing restrictions on processing, increase legal claim liability and increase regulatory scrutiny and fines. These requirements continue to evolve and vary by region and regime, which increases the risk of noncompliance and impacts operations, including additional expenses and resources necessary to ensure and manage compliant operations. The occurrence or consequences of any of these risks may restrict Unique Logistics' ability to operate in the affected region and/or decrease the profitability of its operations in that region. As Unique Logistics continues to expand its business internationally, it is exposed to increased risk of loss from foreign currency fluctuations and exchange controls, as well as longer accounts receivable payment cycles. Foreign currency fluctuations could result in currency exchange gains or losses or could affect the book value of Unique Logistics' assets and liabilities. Furthermore, Unique Logistics may experience unanticipated changes to its income tax liabilities resulting from changes in geographical income mix and changing international tax legislation. Unique Logistics has limited control over these risks, and if it does not correctly anticipate changes in international economic and political conditions, it may not alter its business practices in time to avoid adverse effects.

Unique Logistics provides services primarily to customers engaged in international commerce. As a result, everything that affects international trade has the potential to impact Unique Logistics' business and adversely impact its operating results. Factors that influence international trade, which are outside of Unique Logistics' control, include the following: - currency exchange rates and currency control regulations;         - interest rate fluctuations;         - changes and uncertainties in governmental policies and inter-governmental disputes, which could result in increased tariff rates, quota restrictions, trade barriers, and other restrictions;         - changes in and application of international and domestic customs, trade, and security regulations;         - wars, strikes, civil unrest, acts of terrorism, and other conflicts;         - changes in labor and other costs;         - labor disruptions at ports, airports, terminals and rail;          - natural disasters and epidemics, pandemics, and other health emergencies;         - changes in consumer attitudes regarding goods made in countries other than their own;         - changes in the availability of credit;         - changes in the price and readily available quantities of oil and other petroleum-related products; and         - increased global concerns regarding working conditions and environmental sustainability.

Unique Logistics is not aware of any accurate means of forecasting short-term customer requirements. Long-term customer satisfaction, however, depends upon Unique Logistics' ability to meet these unpredictable short-term customer requirements. Personnel costs, Unique Logistics' single largest expense, are always less flexible in the very near term as Unique Logistics must staff to meet uncertain demand. As a result, its short-term operating results could be disproportionately affected. A significant portion of Unique Logistics' revenues is derived from customers whose shipping patterns are tied closely to consumer demand and from customers in industries whose shipping patterns are dependent upon just-in-time shipping schedules. Therefore, the timing of Unique Logistics' revenues is, to a large degree, impacted by factors out of its control, such as a sudden change in consumer demand for retail goods, changes in trade tariffs, labor disruptions at ports, airports, terminals and rail, 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, Unique Logistics may not learn of a shortfall in revenues until late in a quarter. To the extent that Unique Logistics' did not expect a shortfall in revenues or earnings, any such shortfall could have an immediate and adverse effect on the trading price of Unique Logistics Shares. Volatile market conditions, such as those following the onset of the COVID-19 pandemic, can create situations where carriers and other service providers implement rate increases with little or no advance notice. Unique Logistics often cannot pass these rate increases on to its customers in the same time frame, if at all. As a result, Unique Logistics' yields and margins have been and may in the future be negatively impacted by the effects of volatile market conditions.

Unique Logistics' business is affected by ever-increasing regulations from a number of sources in the United States and in foreign locations in which it operates. Many of these regulations are complex and require varying degrees of interpretation, including those related to trade compliance, data privacy, employment, compensation and competition, and may require changes in Unique Logistics' operating practices, influence the demand for, and the cost of providing, transportation services, and result in other unforeseen costs. For example, in response to ongoing security threats, governments around the world are continuously enacting or updating security regulations. These regulations are multi-layered, increasingly technical in nature and characterized by a lack of harmonization of substantive requirements among various governmental authorities. Furthermore, the implementation of these regulations, including deadlines and substantive requirements, can be driven by regulatory urgencies rather than an industry's realistic ability to comply. Failure to consistently and timely comply with any applicable regulations, or the failure, breach or compromise of Unique Logistics' policies and procedures or those of Unique Logistics' service providers or agents, may result in increased operating costs, damage to Unique Logistics' reputation, difficulty in attracting and retaining key personnel, restrictions on Unique Logistics' operations, and/or fines and penalties. Further, Unique Logistics cannot predict the impact that future regulations may have on its business, and there can be no assurance that it will be able to pass on any increased costs resulting from new or changing regulations on to its customers in the form of rate increases or surcharges, and therefore its operations, revenues, and profitability may be materially and adversely affected as a result.

Future and existing environmental regulatory requirements, including evolving transportation technology, in the United States and abroad could adversely affect operations and increase operating expenses, which in turn could increase Unique Logistics' purchased transportation costs. Unique Logistics may also incur expenses as a result of regulators requiring additional climate-related disclosures regarding its contracted transportation providers that may be labor-intensive to report on. Until the timing, scope, and extent of such possible regulation becomes known, Unique Logistics cannot predict its effect on its business, but if Unique Logistics is unable to pass such costs along to its customers, its business could be materially and adversely affected. Even without any new legislation or regulation, increased public concern regarding greenhouse gas emissions by transportation carriers could harm the reputations of companies operating in the transportation and logistics industries and shift consumer demand toward more locally-sourced products and away from the services that Unique Logistics provides.

Unique Logistics' success depends on its ability to attract, train, and retain qualified personnel, specifically those with management, customer development and general logistics industry skills. Competition for such personnel is intense. If Unique Logistics does not succeed in attracting new personnel or retaining and motivating its current personnel, its business could be harmed.

As a non-asset based provider of global logistics services, Unique Logistics depends on a variety of asset-based service providers, including air, ocean and ground freight carriers, to provide equipment and services necessary to operate its business. The quality and profitability of Unique Logistics' services depend upon effective selection and oversight of its service providers, and therefore its dependence on third parties may impact the delivery and quality of its transportation and logistics services. Such third parties may not fulfill their obligations to Unique Logistics, or Unique Logistics' relationship with these parties may change, which may prevent it from meeting its commitments to its customers. In addition, if Unique Logistics is unable to secure sufficient equipment or other transportation services from third parties to meet its commitments to its customers, its operating results could be materially and adversely affected, and its customers could switch to using its competitors, either temporarily or permanently, for their transportation logistics needs. Many of these risks are beyond Unique Logistics' control, including: - shortages in available cargo capacity or availability and continuing industry consolidation among ocean freight carriers, or changes in the financial stability or operating capabilities of carriers;         - changes by carriers and transportation companies in policies and practices such as scheduling, pricing, payment terms and frequency of service;         - changes in regulations impacting transportation;         - disruptions in the supply or cost of fuel;         - increases in taxes or the cost of labor;         - the introduction of alternative means of transporting freight; and         - unanticipated changes in freight markets. In addition, any determination that Unique Logistics' third-party carriers have violated laws and regulations could seriously damage its reputation and brand, resulting in diminished revenue and profit and increased operating costs. Further, when market demand significantly exceeds available capacity in a given market, which was, for example, the case for various services and markets in 2021 during the post-COVID market recovery, Unique Logistics may not always be able to find acceptable transportation or other service solutions to meet its customers' needs or the routing and delivery of freight may be subject to delays that are outside of its control. If any of these risks occur, it could have a material adverse effect on Unique Logistics' business, results of operations and financial condition.

Carriers can be expected to charge higher prices if market conditions warrant, including increased costs of fuel, labor shortages, increased shipping times due to supply chain disruption or in order to cover higher operating costs. Unique Logistics' gross profits and income from operations may decrease if it is unable to pass these cost increases on to its customers. In some instances where Unique Logistics has entered into contract freight rates with customers, if market conditions change and those contracted rates are below market rates, it may be required to provide transportation services at a loss.