What changed in this filing

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Item 1A. Risk Factors

2025-02-14 compared with 2024-02-16 · 42 added, 39 removed, 192 unchanged (30% of the section changed)

9 unchanged sentences

The market may be impacted by supply chain disruptions or overall economic conditions.

In addition, if a downturn in our customers’ business cycles causes a reduction in the volumes of freight shipped by those customers, particularly among certain national retailers or in the food, beverage, retail, manufacturing, housing, paper, ecommerce, or printing industries, our operating results could be adversely affected.

During 2022 and 2023, we experienced a decline in volumes as shippers struggled with elevated inventory levels and consumer demand was negatively impacted by inflation and macroeconomic uncertainty.

These volume declines have also driven declining freight rates in certain transportation modes and trade lanes.

In addition, if a downturn in our customers’ business cycles causes a reduction in the volumes of freight shipped by those customers, particularly in the retail, food, beverage, automotive, industrial, manufacturing, housing, chemicals, or technology industries, our operating results could be adversely affected.

• Credit risk and working capital:

31 unchanged sentences

• reduction or deterioration in rail service;

• geopolitical factors that may limit the availability of certain carriers;

• the introduction of alternative means of transporting freight;

28 unchanged sentences

Company risk factors

We rely on technology to operate our business.

We have internally developed the majority of our operating systems and also rely on technology provided by third parties.

Our continued success is dependent on our systems continuing to operate and to meet the changing needs of our customers and users.

The continued automation of existing processes and usage of third-party technology and cloud network capacity will require adaptation and adjustments that may increase our exposure to cybersecurity risks and system availability reliance.

We rely on our technology staff and third-party vendors to successfully implement changes to, and to maintain, our operating systems in an efficient manner.

If we fail to maintain, protect, and enhance our operating systems, we may be at a competitive disadvantage and lose customers.

As demonstrated by recent material and high-profile data security breaches, computer malware, viruses, computer hacking, and phishing attacks have become more prevalent, have occurred on our operating systems in the past, and may occur on our operating systems in the future.

Previous attacks on our operating systems have not had a material financial impact on our operations, but we cannot guarantee future attacks will have little to no impact on our business.

Furthermore, given the interconnected nature of the supply chain and our significant presence in the industry, we believe we may be an attractive target for such attacks.

The insurance coverage we currently have in place may not apply to a particular loss or it may not be sufficient to cover all liabilities to which we may be subject.

A loss for which we are not adequately insured could materially affect our financial results.

Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, a significant impact on the performance, reliability, security, and availability of our operating systems and technical infrastructure to the satisfaction of our users may harm our reputation, impair our ability to retain existing customers or attract new customers, and expose us to legal claims and government action, each of which could have a material adverse impact on our financial condition, results of operations, and growth prospects.

We rely on technology to operate our business, with the majority of our operating systems developed internally and supplemented by third-party technology, which may subject us to cybersecurity events and disruptions.

Our continued success depends on the effective operation and adaptation of these systems to meet the evolving needs of our customers and users.

The automation of existing processes and the use of third-party technology and cloud network capacity may increase our exposure to cybersecurity risks and system availability reliance.

We depend on our technology staff and third-party vendors to implement changes and maintain our systems efficiently.

Failure to maintain, protect, and enhance our operating systems could result in a competitive disadvantage and loss of customers.

We process and maintain confidential, proprietary, personal, and sensitive information, including financial and business data.

Our information technology systems, devices, storage, and applications, as well as those maintained by third-party providers, are vulnerable to damage, disruptions, and shutdowns due to cyberattacks, ransomware, malware, phishing, denial of service attacks, and other unauthorized access attempts.

These incidents have occurred in the past and may happen again, potentially causing material service outages, inappropriate access, or other significant business interruptions.

The frequency and sophistication of cyberattacks have increased globally, making it challenging to anticipate and prevent such events or mitigate their effects.

Additionally, we may not immediately detect these incidents.

Given the interconnected nature of the supply chain and our significant industry presence, we may be an attractive target for cyberattacks.

Many aspects of our operations depend on third-party networks and systems, which are also susceptible to cyber risks.

While we have dedicated resources for security, privacy, and incident response, our processes may not be adequate to prevent or limit harm or to remediate incidents promptly.

A failure to prevent a cyberattack that impacts the performance, reliability, security, and availability of our systems could result in service interruptions, operational difficulties, inability to retain or attract customers, loss of revenues or market share, expose us to legal claims and government actions, liability to customers, reputational damage, and increased service and maintenance costs.

Addressing these issues could be costly, and our insurance coverage may not be sufficient to cover all liabilities.

These impacts could adversely affect our financial condition, results of operations, and growth prospects.

Our international operations subject us to operational, financial, and data privacy risks.

We provide services within and between foreign countries on an increasing basis.

Our business outside of the U.S.

is subject to various risks, including:

Our business outside of the United States is subject to various risks, including:

• changes in tariffs, trade restrictions, trade agreements, and taxations;

2 unchanged sentences

• different liability standards;

• intellectual property laws of countries that do not protect our rights in our intellectual property, including but not limited to, our proprietary information systems, to the same extent as the laws of the U.S.;

• issues related to non-compliance with laws, rules, and regulations in the countries in which we operate including the U.S.

32 unchanged sentences

Such impacts may disrupt our operations by adversely affecting our ability to procure services that meet regulatory or customer requirements and may negatively affect our results of operations, cash flows, and financial condition.

We may have difficulties integrating acquired companies.

We may have difficulties integrating acquired companies or efficiently managing divestitures.

For acquisitions, success depends upon efficiently integrating the acquired business into our existing operations.

2 unchanged sentences

If we are unable to successfully integrate and grow these acquisitions and to realize contemplated revenue synergies and cost savings, our business, prospects, results of operations, financial position, and cash flows could be materially and adversely affected.

Our growth and profitability may not continue, which may result in a decrease in our stock price.

Divestiture activity poses risks, and success depends upon efficiently managing the transition process.

Failure to do so includes potential risks including disruption to our core operations, failure to deliver the anticipated value for shareholders, diverting management’s attention from other strategic initiatives, negative impacts on our customer and carrier relationships, and the loss of key employees.

The inability to successfully manage these risks may result in higher operating expenses, lost revenues, or other negative effects on earnings and our financial results.

Our growth and profitability may not continue, or we may not achieve our long-term growth targets, which may result in a decrease in our stock price.

There can be no assurance that our long-term growth targets will be achieved or that we will be able to effectively adapt our management, administrative, and operational systems to respond to any future growth.

10 unchanged sentences

Governmental, regulatory, and legal risk factors

Changes to income tax regulations in the U.S.

and other jurisdictions where we operate may increase our tax liability.

We are subject to income taxes in the U.S.

and other jurisdictions where we operate.

Changes to income tax regulations in the United States and other jurisdictions where we operate may increase our tax liability.

We are subject to income taxes in the United States and other jurisdictions where we operate.

Changes to income tax laws and regulations in any of the jurisdictions where we operate could adversely affect our overall tax liability.

The Organization for Economic Cooperation and Development (“OECD”) reached agreement among various countries to implement a minimum 15 percent tax rate on certain multinational enterprises, commonly referred to as Pillar Two.

Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two proposals.

We are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available.

Subsequently, multiple sets of administrative guidance have been issued.

Many non-U.S.

tax jurisdictions have either enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024, including the European Union Member States, with the adoption of additional components in later years, or announced their plans to enact legislation in future years.

We are subject to these rules in certain jurisdictions in which we operate, and any expected tax impacts have been included in our results.

As rules for more jurisdictions will become effective in 2025, we are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available.

Some of these legislative changes could impact our effective tax rate and tax liabilities.

7 unchanged sentences

Most contracted motor carriers have insurance exceeding these minimum requirements, as well as cargo insurance in varying policy amounts.

Railroads, which are generally self-insured, provide limited common carrier cargo loss or damage liability protection, generally up to $250,000 per shipme nt.

Railroads, which are generally self-insured, provide limited common carrier cargo loss or damage liability protection, generally up to $250,000 per shipment.

Although these drivers are not our employees and all of these drivers are employees, owner-operators, or independent contractors working for the contracted motor carriers, from time to time, claims may be asserted against us for their actions or for our actions in retaining them.

Cl aims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all.

Claims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all.

A material increase in the frequency or severity of accidents, liability claims, workers’ compensation claims, or unfavorable resolutions of claims could materially and adversely affect our operating results.

21 unchanged sentences

Our business depends upon compliance with numerous government regulations.

Our operations may be regulated and licensed by various federal, state, and local transportation agencies in the U.S.

and similar governmental agencies in foreign countries in which we operate.

Our operations may be regulated and licensed by various federal, state, and local transportation agencies in the United States and similar governmental agencies in foreign countries in which we operate.

We are subject to licensing and regulation as a property freight broker and are licensed by the DOT to arrange for the transportation of property by motor vehicle.

1 unchanged sentence

For purposes of our Global Forwarding services, we are also subject to regulation by the FMC as an ocean freight forwarder and NVOCC, and we maintain separate bonds and licenses for each.

We operate as a Department of Homeland Security certified IAC, providing air freight services, subject to commercial standards set forth by the IATA and federal regulations issued by the TSA.

We provide customs brokerage services as a customs broker under a license issued by U.S.

Customs and Border Protection (“CBP”), and we maintain Customs Trade Partnership Against Terrorism certification with CBP.

We operate as a U.S.

Department of Homeland Security certified IAC, providing air freight services, subject to commercial standards set forth by the IATA and federal regulations issued by the TSA.

We provide customs brokerage services as a customs broker under a license issued by CBP, and we maintain CTPAT certification with CBP.

Some customs entries fall within the jurisdiction of other authoritative governmental agencies (e.g., Food and Drug Administration, Fish and Wildlife Service, etc.).

8 unchanged sentences

No assurances can be given that we will be able to pass these increased costs on to our customers in the form of rate increases or surcharges, and our operations and profitability may be materially and adversely affected as a result.

Department of Homeland Security regulations applicable to our customers that import goods into the U.S.

and our contracted ocean carriers can impact our ability to provide and/or receive services with and from these parties.

United States Department of Homeland Security regulations applicable to our customers that import goods into the United States and our contracted ocean carriers can impact our ability to provide and/or receive services with and from these parties.

Enforcement measures related to violations of these regulations can slow and/or prevent the delivery of shipments, which may negatively impact our operations.

We cannot predict the impact that future regulations may have on our business.

We cannot predict the impact future regulations may have on our business.

Our failure to maintain required permits or licenses, or to comply with applicable regulations, could result in substantial fines or revocation of our operating permits and licenses.

Our contracted transportation providers are subject to increasingly stringent laws protecting the environment, including transitional risks relating to climate change, which could directly or indirectly have a material adverse effect on our business.

Future and existing environmental regulatory requirements, including evolving transportation technology, in the U.S.

and abroad could adversely affect operations and increase operating expenses, which in turn could increase our purchased transportation costs.

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 our purchased transportation costs.

We may also incur expenses as a result of regulators requiring additional climate-related disclosures regarding our contracted transportation providers that may be labor-intensive to report on.

Until the timing, scope, and extent of such possible regulation becomes known, we cannot predict its effect on our company, but if we are unable to pass such costs along to our customers, our business could be materially and adversely affected.

Until the timing, scope, and extent of such possible regulation becomes finalized, we cannot predict its effect on our company, but if we are unable to pass such costs along to our customers, our 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 our services.

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors