What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-01 compared with 2022-03-01 · 137 added, 146 removed, 161 unchanged (64% of the section changed)

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Discontinued Operation

On April 23, 2020, the Board of Directors (the “Board”) approved a strategy to divest our Pool Distribution business (“Pool”), and the sale of Pool was completed on February 12, 2021.

Pool provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region.

Pool offered this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.

As a result of the strategy to divest of Pool, Pool’s results of operations are presented as a discontinued operation in our Consolidated Statements of Comprehensive Income for all periods presented.

In addition, assets and liabilities were reflected as “Current assets held for sale”, “Noncurrent assets held for sale”, “Current liabilities held for sale” and “Noncurrent liabilities held for sale” in the Consolidated Balance Sheets as of December 31, 2020.

Unless otherwise noted, amounts, percentages and discussion for all periods reflect the results of operations, financial condition and cash flows from our continuing operations.

On April 23, 2020, the Company made a decision to divest of Pool and the sale was completed on February 12, 2021.

As a result, the results of Pool were classified to “Loss from discontinued operation, net of tax” in the Consolidated Statements of Comprehensive Income for the year ended December 31, 2021.

Certain corporate overhead and other costs previously allocated to Pool for segment reporting purposes did not qualify for classification within discontinued operation and were allocated to continuing operations.

Services Provided

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Expedited Freight.

We operate a comprehensive national network to provide expedited regional, inter-regional and national LTL services.

Expedited Freight offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.

We plan to grow our LTL and final mile geographic footprints through greenfield start-ups as well as acquisitions.

We operate a comprehensive national network that provides expedited regional, inter-regional and national LTL services.

We have, and plan to continue to grow our LTL and final mile geographic footprints through greenfield start-ups as well as acquisitions.

During the year ended December 31, 2022, Expedited Freight accounted for 78.7% of our consolidated revenue.

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Intermodal also offers dedicated contract and Container Freight Station (“CFS”) warehouse and handling services.

Today, Intermodal operates primarily in the Midwest and Southeast, with a smaller operational presence in the Southwest and Mid-Atlantic United States.

We plan to grow Intermodal’s geographic footprint through acquisitions as well as greenfield start-ups where we do not have an acceptable acquisition target.

Intermodal operates primarily in the Midwest and Southeast, with a smaller operational presence in the Southwest, Mid-Atlantic, and West Coast.

We have, and plan to grow Intermodal’s geographic footprint through greenfield start-ups where we do not have an acceptable acquisition target, as well as acquisitions.

During the year ended December 31, 2022, Intermodal accounted for 21.3% of our consolidated revenue.

Our strategy is to take advantage of our core competencies in precision execution to provide asset-light freight and logistics services in order to profitably grow in the premium segments of the markets we serve.

Our strategy is to take advantage of our core competencies in precision execution to provide asset-light freight and logistics services to profitably grow in the premium segments of the markets we serve.

Principal components of our efforts include:

• Expand Service Offerings.

• Expand Service Offerings and Terminal Footprint.

A key part of our growth strategy is to offer new and enhanced services that address our customers’ premium transportation needs.

Over the past few years, we added or enhanced LTL pickup and delivery, final mile solutions, expedited truckload, temperature-controlled shipments, warehousing, drayage, customs brokerage and shipment consolidation and handling services.

These services benefit our existing

customers and increase our ability to attract new customers.

Another part of our growth strategy is to open new terminals in under penetrated markets away from airport locations.

These services benefit our existing customers and increase our ability to attract new customers.

Another part of our key growth strategy is to pursue geographic expansion in under penetrated markets to better meet the current and future needs of customers.

As a result, we plan to invest in new terminals, in our trailer fleet and technology to enable us to efficiently handle the increased freight in the new markets.

• Manage Pricing and Freight Characteristics.

Our business strategy involves managing both the price we charge for our services and the mix of freight we transport to operate our LTL network efficiently and more profitably.

Over the past several years, we have implemented initiatives to improve the freight characteristics in our LTL network that has allowed us to increase our yield and revenue per shipment.

• Continue to Focus on Delivering Best-in-Class Service.

The foundation of our growth strategy is our commitment to provide our customers with the most reliable and damage-free alternative for their shipments.

Commitment to precision execution service is valued by customers and allows us to charge fair compensation for our services and positions us to improve market share.

• Pursue Strategic Acquisitions.

We continue to evaluate and pursue acquisitions that support our growth strategy.

We continue to evaluate and pursue acquisitions that help expand geographic reach while gaining the business base of the acquired entity.

In 2014 we created the foundation for what is our Intermodal segment by acquiring Central States Trucking Co.

Since the acquisition of CST, we have completed thirteen additional intermodal acquisitions.

Since the acquisition of CST, we have completed fifteen additional intermodal acquisitions.

In order to enhance our final mile footprint, we acquired FSA Network, Inc.

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(“CLW”) in October 2020.

In May 2021, we acquired J&P Hall Express Delivery (“J&P”) to expand the expedited LTL footprint across the Southeastern United States.

In May 2021, we acquired J&P Hall Express Delivery (“J&P”) to expand the expedited LTL footprint across the Southeast.

• Enhance Information Systems.

We are committed to the development and enhancement of our information systems in order to provide competitive service advantages and increased productivity.

We are committed to the development and enhancement of our information systems to provide competitive service advantages and increased productivity.

We believe our information systems have and will assist us in capitalizing on new business opportunities with existing and new customers.

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Our Expedited Freight network encompasses approximatel y 92% of all continental U.S.

zip codes, with service in Canada.

zip codes, with service in Canada and Mexico.

During 2022, approximately 28% of the freight handled by our LTL network was for overnight delivery, approximately 59% was for delivery within two to three days and the balance was for delivery in four or more days.

The average weekly volume of freight moving through our LTL network was approximately 55.4 million pounds per week in 2021.

During 2021, our average shipment weighed approximately 729 pounds.

The average weekly volume of freight moving through our LTL network was approximately 54.8 million pounds per week and our average shipment weighed approximately 764 pounds in 2022.

Although we impose no significant size or weight restrictions, we focus our marketing and price structure on shipments of 200 p ou nds or more.

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Transportation

Expedited Freight’s licensed motor carriers entered into contracts with independent contractor fleets, owner-operators and other third-party transportation capacity providers for most of its transportation services.

Our independent contractor fleet owners and owner-operators lease their equipment to the Company’s motor carriers (“Leased Capacity Providers”) and own, operate and maintain their own tractors and employ their own drivers.

Our freight handlers load and unload our trailers and vehicles for hauling by our Leased Capacity Providers between our terminals.

We seek to establish long-term relationships with Leased Capacity Providers to assure dependable service and availability.

Expedited Freight secures transportation capacity from four sources:

• independent contractors that own and lease their equipment (primarily tractors) to the Company (“Leased Capacity Providers”);

• third-party contracted motor carriers;

• capacity secured by transportation intermediaries, including freight brokers;

• Company-owned equipment operated by employee drivers.

The majority of the transportation capacity utilized by Expedited Freight is provided by Leased Capacity Providers, with whom we seek to establish long-term relationships with to assure dependable service and availability.

We believe Expedited Freight has experienced significantly higher average retention of Leased Capacity Providers compared to other over-the-road transportation providers.

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Usually, Leased Capacity Providers negotiate schedules for their drivers that are between the same two cities or along a consistent route, improving quality of work life for the drivers of our Leased Capacity Providers and, in turn, increasing the retention rate of drivers and Leased Capacity Providers.

As a result of efforts to expand our logistics and other services, and in response to seasonal demands and volume surges in particular markets, we also purchase transportation from other surface transportation providers to handle overflow volume.

Of the $743,418 incurred for Expedited Freight's transportation during 2021, we purchased 30.4% from the Leased Capacity Providers of our licensed motor carrier, 44.9% from third-party cartage agents and 24.7% from other surface transportation providers.

All of our Expedited Freight independent contractor tractors are equipped with in-cab communication devices, which enable us to communicate with drivers, plan and monitor shipment progress and monitor and record drivers’ hours of service.

We use the real-time global positioning data obtained from these devices to improve customer and driver service.

We also purchase transportation capacity supplied by third-party contracted motor carriers and transportation intermediaries.

The majority of the transportation capacity utilized in our big and bulky final mile service is provided by third-party motor carriers, and we utilize capacity from both third-party motor carriers and transportation intermediaries to support other Expedited Freight service offerings in response to seasonal demands and volume surges in particular markets, to handle overflow volume.

A small portion of Expedited Freight's transportation capacity is provided by employee drivers operating company-owned equipment.

Other Services

Expedited Freight continues to evolve the capabilities of its network to provide additional value-added services.

Expedited Freight also seeks to lower its unit costs by integrating these services into the overall operation of its network.

Expedited Freight provides additional value-added services that are integrated into the overall operation of its network.

Expedited Freight offers final mile services which include the delivery and installation of heavy bulky appliances such as washing machines, dryers, dishwashers and refrigerators.

Through the acquisition of FSA Logistix in 2019, Linn Star in January 2020, and CLW in October 2020, Expedited Freight significantly expanded its final mile geographic footprint and now operates in 112 locations nationwide.

Expedited Freight is also increasingly integrating these deliveries into its LTL pickup and delivery and terminal operations so as to increase network density and lower overall LTL unit costs.

We significantly expanded the final mile geographic footprint and operate in over 117 locations nationwide.

Expedited Freight continues to integrate these deliveries into its LTL pickup and delivery and terminal operations so as to increase network density and lower overall LTL unit costs.

Expedited Freight offers truckload services which include expedited truckload brokerage, dedicated fleet services, as well as high security and temperature-controlled logistics services.

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Our dependable service and wide-ranging service offerings also make Expedited Freight an attractive option for 3PL providers, which is one of the fastest growing segments in the transportation industry.

Because we deliver dependable service, integrated air cargo carriers use our network to provide overflow capacity and other services, including shipment of bigger packages and pallet-loaded cargo.

In 2021, Expedited Freight’s ten largest customers accounted for approximately 40% of its operating revenue and no single customer had revenue greater than 10% of Expedited Freight operating revenue for 2021.

Integrated air cargo carriers use our network to provide overflow capacity and other services, including shipment of bigger packages and pallet-loaded cargo.

In 2022, Expedited Freight’s ten largest customers accounted for approximately 38% of its revenue and no single customer had revenue greater than 10% of Expedited Freight revenue for 2022.

Our Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads.

Intermodal also offers dedicated contract and container freight station (“CFS”) warehouse and handling services.

Today, Intermodal operates primarily in the Midwest and Southeast, with smaller operational presence in Southwest and Mid-Atlantic United States.

We plan to expand beyond our current geographic footprint through acquisitions as well as greenfield start-ups where no suitable acquisition is available.

Intermodal also provides linehaul and local less-than-truckload service in the Midwest, as well as CFS warehousing services (e.g.

devanning, unit load device build-up/tear-down, and security screening) for air and ocean import/export freight at five (5) of its Midwest terminals (Chicago, Cleveland, Milwaukee, Indianapolis and Detroit).

devanning, unit load device build-up/tear-down, and security screening) for air and ocean import/export freight at five of its Midwest terminals.

Our Intermodal service differentiators include:

• Immediate proof of delivery (“POD”) and Signature Capture capability via tablets;

• Immediate proof of delivery and signature capture capability via tablets;

• All drivers receive dispatch orders on hand-held units and are trackable via GPS;

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Intermodal’s primary office is located in Oak Brook, Illinois.

Intermodal’s network consists of 29 locations primarily in the Midwest and Southeast, with a smaller operational presence in the Southwest and Mid-Atlantic United States.

Intermodal’s network consists of 30 locations primarily in the Midwest and Southeast, with a smaller operational presence in the Southwest, Mid-Atlantic, and West Coast.

Transportation

Intermodal utilizes a mix of Company-employed drivers, Leased Capacity Providers and third-party carriers.

During 2021, approximately 71% of Intermodal’s direct transportation expenses were provided by Leased Capacity Providers, 24% by Company-employed drivers, and 5% by third-party carriers.

Intermodal utilizes a mix of Company-employed drivers, Leased Capacity Providers and third-party motor carriers.

During 2022, approximate ly 71% of Intermodal’s direct transportation expenses were provided by Leased Capacity Providers, 24% by Company-employed drivers, and 5% by third-party motor carriers.

All of our Intermodal company and independent contractor tractors are equipped with computer tablets, which enable us to communicate with our drivers, plan and monitor shipment progress and monitor our drivers’ hours of service.

We use the real-time global positioning data obtained from these devices to improve customer and driver service and provide a high level

of shipment visibility to our customers (including immediate POD signature capture).

We use the real-time global positioning data obtained from these devices to improve customer and driver service, and provide a high level of shipment visibility to our customers (including immediate proof of delivery signature capture).

We believe that our technology is a key differentiator and enables us to provide a higher level of service than our competitors.

Intermodal’s customer base is primarily comprised of international freight forwarders, passenger and cargo airlines, beneficial cargo owners and steamship lines.

In 2021, Intermodal’s ten largest customers accounted for approximate ly 32% of its operating revenue and had one customer with revenue greater than 10% of Intermodal operating revenue for 2021.

In 2022, Intermodal’s ten largest customers accounted for approximate ly 33% of its operating revenue and had one customer with revenue greater than 10% of Intermodal revenue for 2022.

We compete in the North American transportation and logistics services industry, and the markets in which we operate are highly competitive, very fragmented and historically have few barriers to entry.

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To a lesser extent, we also compete with integrated air cargo carriers and passenger airlines.

Our competition ranges from small operators that compete within a limited geographic area to companies with substantially greater financial and other resources, including greater freight capacity.

Our competition ranges from small operators that operate within a limited geographic area to companies with substantially greater financial and other resources, including greater freight capacity.

Our Expedited Freight segment primarily competes with other national and regional truckload carriers.

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Our Intermodal segment primarily competes with national and regional drayage providers.

We believe competition in our segments is based primarily on quality service, available capacity, on-time delivery, flexibility, reliability, security, transportation rates, location of facilities, and business relationships, and we believe we compete favorably with other transportation service companies in these areas.

To that end, we believe our Expedited Freight segment has an advantage over other truckload and less-than-truckload carriers because Expedited Freight delivers faster, more reliable services between cities at rates that are generally significantly below the charge to transport the same shipments to the same destinations by air.

We believe competition in our segments is based primarily on quality of service, price, available capacity, on-time delivery, flexibility, reliability, security, transportation rates, location of facilities, and business relationships, and we believe we compete favorably with other transportation service companies in these areas.

To that end, we believe our Expedited Freight segment has an advantage over other truckload and less-than-truckload carriers because Expedited Freight delivers faster, more reliable services between cities at rates that are generally significantly below the price to transport the same shipments to the same destinations by air.

We believe our Intermodal segment has a competitive advantage over other drayage providers because we deliver more reliable service while offering greater shipment visibility and security.

Additionally, we believe our Intermodal segment is one of the leading providers of drayage and related services in North America today.

We market all of our services through a sales and marketing staff located in major markets of the United States.

Senior management is also actively involved in sales and marketing to the national and local account levels.

We market all of our services through a sales and marketing team located in major markets of the United States.

Senior leadership is also actively involved in sales and marketing to national and local accounts.

We participate in trade shows and advertise our services through digital marketing channels, trade publications, and the Internet via www.tlxpedited.com, www.forwardair.com, www.forwardaircorp.com, and www.forward-intermodal.com.

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The information on our websites is not part of this filing and is therefore not incorporated by reference unless such information is specifically referenced elsewhere in this report.

Historically, our operating results have been subject to seasonal trends when measured on a quarterly basis.

The first quarter has traditionally been the weakest and the third and fourth quarters have traditionally been the strongest.

Typically, this pattern has been the result of factors such as economic conditions, customer demand, weather, and national holidays.

Additionally, a significant portion of our revenue is derived from customers whose business levels are impacted by the economy.

Generally, our operating results have been subject to seasonal trends when measured on a quarterly basis with the first quarter the weakest and the third and fourth quarters have been the strongest.

This seasonal pattern has been the result of numerous factors such as economic conditions, customer demand, weather, and national holidays.

Additionally, a significant portion of our revenue is derived from customers whose business levels are impacted by trends in the economy.

We recognize that our workforce, including our freight handlers, is our most valuable asset.

We strive to put people at the center of everything we do by empowering our workforce to improve their lives and realize their full potential.

Through ongoing talent development, comprehensive compensation and benefits, and a focus on health, safety and employee well-being, we strive to help our employees in all aspects of their lives so they can do their best at work.

The recruitment, training and retention of qualified employees is essential to support our continued growth and to meet the service requirements of our customers.

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Roadway Health and Safety

We are committed to educating our people and promoting driver health and wellness through routine communication campaigns and information designed to improve knowledge and produce safer results.

Drivers of our Leased Capacity Providers complete a three-day safety orientation as part of their onboarding where they are assigned several training courses.

Safety trainings may also be assigned on an ongoing basis, based on driving behaviors.

We are committed to educating our employees and promoting driver health and wellness through routine communication campaigns and information designed to emphasize the importance of safe operations.

Drivers of our Leased Capacity Providers complete a three-day safety orientation as part of their onboarding where they are assigned several training courses, and from time-to-time, additional safety trainings may also be assigned on an ongoing basis, dependent upon driving behaviors.

We invest in a variety of programs focused on improving and maintaining driver health and wellness.

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We provide a quarterly safety bonus and annual vehicle giveaway to incentivize our Leased Capacity Providers to promote safe driving practices.

These initiatives celebrate drivers of our Leased Capacity Providers who have zero moving violations or accidents each quarter.

Both initiatives celebrate drivers of our Leased Capacity Providers who have zero moving violations or accidents on a quarterly basis.

Drivers who obtain four quarterly bonuses are eligible to win a new vehicle.

In 2022, 209 Leased Capacity Providers as well as Company-employed drivers qualified for the vehicle giveaway.

Looking ahead, we will continue to identify and promote opportunities to adopt health and wellness practices for the drivers of our Leased Capacity Providers.

Looking ahead, we will continue to identify and promote programs that focus on the health and wellness for the drivers of our Leased Capacity Providers.

Workplace Health and Safety

We are committed to maintaining safe facilities for our employees and independent contractors.

We are also committed to evaluating our practices and training our employees and independent contractors to prevent workplace incidents.

Beyond our roadway safety focus, we employ, maintain, and monitor a robust health and safety program for all of our workers, which establishes procedures and policies to prevent workplace incidents.

We are committed to the safety of our employees and independent contractors.

Our safety program focuses on risk reduction and safety management procedures that promote preventative measures.

We employ, maintain, and monitor a robust health and safety program for all of our workers to prevent workplace incidents.

Policies and procedures exist to investigate accidents and monitor lessons learned, driving continuous improvement in the health and safety practices across our facilities.

All of our employees are assigned to training courses as part of onboarding and employees may be assigned additional refresher trainings based on corrective action or identified risk.

Diversity and Inclusion

We are committed to creating an even more diverse, equitable, and inclusive work environment than we have today.

Our commitment to a diverse and inclusive workplace begins at the top, starting with our Board.

Diversity in race, ethnicity, and gender are important factors in evaluating candidates for board nominees and since July 2017, we have added four female directors to our Board, two directors who identify as Hispanic, one director who identifies as African American and one director who identifies as Indian.

We believe diverse backgrounds and experiences are important to provide a range of perspectives to overcome challenges, improve business performance, and support good decision making.

The skills and talents of our diverse workforce drive our performance and we respect the value they bring to our business.

We strive for a diverse and inclusive environment where everyone can contribute and thrive.

We have an ongoing commitment to ensure we have a diverse workforce and Board presence.

We understand that a welcoming workplace attracts top talent, which drives performance and profitability.

We seek candidates from all backgrounds, to continue to build our industry’s most qualified workforce.

In 2020, we created a Diversity and Inclusion (“D&I”) Council to promote employee inclusion and engagement through initiatives that celebrate the diversity of our employees.

As an organization that puts people at the center of everything we do, our vision is increased employee engagement and retention in part through enhanced D&I practices.

Our assessment identified several D&I improvement activities that foster an inclusive environment :

• Incorporate additional D&I training into our education programs for employees and leadership.

• Engage our employees in the celebration of diversity.

We plan to launch a series of Employee Resource Groups to foster an inclusive environment and better understand our colleagues’ backgrounds.

• Assess our current benefits program to identify improvement opportunities to support our increasingly diverse employees’ unique needs.

Our employees are also offered three D&I trainings throughout the year, Understanding Diversity, Generational Awareness, and Emotional Intelligence.

Compensation and Benefits

One of the most important ways we support our employees and their families is through a comprehensive benefits package for all full-time employees.

Our employees have access to the following:

• Competitive Benefits.

We provide a strong benefit package to employees that includes health care insurance, dental insurance, vision insurance, Company-paid life insurance, paid time off, Company-paid holidays, family medical leave, and a 401(k) with a Company match.

• Wellness Program.

The Employee Wellness Program provides access to annual medical screenings and health fairs, at no cost to the employee, to help keep employees healthy.

Additionally, the Employee Wellness Program provides discounted gym memberships, free weight loss and smoking cessation programs, a healthy pregnancy program with incentives, and an Employee Assistance program.

• Work / Life Balance.

We understand that a work / life balance is important to our employees.

We consistently strive to improve our paid time off benefits for all of our employees, which allows us to retain and recruit quality employees.

Beyond our benefits package, career advancement has always been at the forefront for our employees and we truly pride ourselves with being able to promote from within.

Our continuous learning workshops range from customer service to leadership and beyond.

We strive to provide meaningful development opportunities for 100% of our employee population.

We manage a trailer pool that is utilized by all of our reportable segments to move freight through our networks.

We believe that our employees’ unique and diverse capabilities positively impact our success.

Our commitment to diversity and inclusion starts at the top with a highly skilled and diverse board.

Since 2017, we added four female directors to our Board, two directors who identify as Hispanic, one director who identifies as African American and one director who identifies as Indian.

We are committed to further increase the percentage of diverse representation in our overall employee base as well as to further initiatives for compensation equity, employee engagement, development and inclusion.

We believe that incorporating diversity and inclusion (“D&I”) initiatives into our everyday business practices enhances innovation and enables diversity of thought.

Building upon our core values, our employees value learning from different perspectives and welcome the opportunity to work with those of diverse backgrounds.

Through our D&I initiatives, employees take part in robust training, such as understanding diversity, generational awareness, and emotional intelligence.

We also provide our employees with Employee Resource Groups to help foster a diverse and inclusive workplace as well as provide for the growth and development of underrepresented groups.

We regularly review surveys of market rates for jobs to ensure our compensation practices are competitive.

We are committed to providing total rewards that are market-competitive and performance-based, driving innovation and operational excellence.

Our compensation programs, practices, and policies reflect our commitment to reward short- and long-term performance that aligns with, and drives shareholder value.

Total direct compensation is generally positioned within a competitive range of the market median, with differentiation based on tenure, skills, proficiency, and performance to attract and retain key talent.

In addition to salaries, our compensation programs include annual incentive bonuses, stock awards, and participation in a retirement savings plan, dependent upon the position and level of employee.

We also invest in talent development initiatives to support the ongoing career development of all employees, including learning workshops that target all levels of employees.

We manage a trailer pool that is utilized by all of our businesses to move freight through our networks.

Our trailer pool includes dry van, refrigerated and roller-bed trailers, and substantially all of our trailers are 53 feet long.

We own the majority of the trailers we use, but we supplement at times with leased trailers.

As of December 31, 2021, we had 6,370 owned trailers in our fleet with an average age of approximately six years.

As of December 31, 2022, we had 6,021 owned trailers in our fleet with an average age of approximately nine years.

In addition, as of December 31, 2022, we also had 705 leased trailers in our fleet.

As of December 31, 2021, we had 267 owned tractors and straight trucks in our fleet, with an average age of approximately five years.

As of December 31, 2022, we had 273 owned tractors and straight trucks in our fleet, with an average age of approximately three years.

In addition, as of December 31, 2022, we also had 643 leased tractors and straight trucks in our fleet.

Environmental Protection and Community Support

We embrace a comprehensive definition of sustainability that addresses Environmental, Social, and Governance factors (“ESG”).

To our employees, our communities, our customers, our suppliers, and our investors, each impact area matters.

In 2019, our Board amended the Corporate Governance and Nominating (“CG&N”) Committee Charter to oversee our efforts related to environmental, social, and governance matters, and management of sustainability-related risks and opportunities.

At least twice a year, the CG&N Committee is updated on each of these topics and provides feedback and recommendations that it deems appropriate.

At the beginning of 2020, our leadership created and staffed the Head of Corporate ESG role to provide oversight of our ESG vision, strategic planning, performance management and improvement activities.

Shortly after, we initiated an ESG market analysis and benchmarking exercise that explored the ESG issues that most impact transportation and logistics industries and marketplaces.

In second quarter of 2020, we began to conduct an ESG assessment, starting with a third-party stakeholder assessment that served as a basis for identifying and prioritizing ESG topics most relevant to our industry, our business, and our stakeholders.

The assessment’s findings yielded initial topics that we recognized as important.

We followed with a more in-depth assessment of risks and opportunities, utilizing Sustainable Accounting Standards Board (“SASB”) standards as a guide, in order to further refine our disclosure topics and gain stakeholder alignment.

SASB identifies us as part of the “Airfreight and Logistics” industry;

we decided to also incorporate the disclosure topics under “Road Transportation” to assure that all relevant topics for our business were represented in this analysis.

This more detailed assessment yielded clarity of our ESG topics and prioritization based on the degree of both qualitative and quantitative impact to our business.

We identified ten ESG topic priority areas relevant to our business and

mapped each to widely adopted ESG reporting standards as identified by SASB.

Within these ten topic areas, we identified specific related risks and opportunities, and aligned on improvement activities.

The following are the ten ESG topic priority areas we identified relevant to our business and the foundation for our sustainability approach:

Corporate Sustainability

We embrace a comprehensive approach to sustainability that addresses Environmental, Social, and Governance (“ESG”) factors.

Our integrated framework focuses on three pillars:

(i) People and Communities;

(ii) Customer;

and (iii) Environment.

After completing an ESG assessment in 2020 utilizing the Sustainable Accounting Standards Board (SASB) standards and conducting a third-party stakeholder assessment, we identified ten ESG priority areas within these three pillars that we believe are relevant to our business and important to our employees, communities, cusotmers, investors, partners and contractors, and which form the foundation for our sustainability strategy:

• Roadway Health & Safety

• Measurement & Disclosure

• Workplace Health & Safety

Independent Contractor Practices;

Diversity & Inclusion Practices;

Community Impact & Partnerships;

Measure & Disclose;

• Information Security

• Independent Contractor Practices

• Responsible Supplier Practices

• Diversity, Equity, Inclusion, and Belonging (DEI&B) Practices

• Green House Gas (GHG) Emissions Reduction Practices

and Air Quality Practices

Beyond our roadway safety focus, we employ, maintain, and monitor a robust Health and Safety program for all of our workers which establishes procedures and policies to prevent workplace incidents.

• Community Impact & Partnerships

• Air Quality Practices

Since 2019, we have deployed meaningful resources to manage sustainability risks and to capitalize on related opportunities for the benefit of our stakeholders.

In 2019, our Board amended the Corporate Governance and Nominating (“CG&N”) Committee Charter to give the CG&N Committee oversight over our ESG-related efforts.

At least twice a year, the CG&N Committee is updated on each of these topics and provides feedback and direction that it deems appropriate.

At least annually, the Chair of the CG&N Committee will provide a report on these topics to the full Board.

In 2020, Forward’s leadership created the Head of Corporate ESG role to provide oversight of Forward’s ESG vision, strategic planning, performance management, and improvement activities.

In 2021, we published our first ESG Report and created our internal ESG Steering Committee, which oversees our company-wide ESG strategy and meets at least quarterly and on an as-needed basis.

In 2022, we streamlined our internal data collection process, completed our Greenhouse Gas (GHG) inventory, set measurable targets and goals, and published our second ESG report through the launch of our new ESG website which we will update annually with our progress.

The ESG report and new website are accessible through our investor relations site, https://ir.forwardaircorp.com/esg .

The information on our website and our ESG report are not incorporated into, and are not a part of, this report.

People and Communities

We are committed to maintaining safe facilities for our employees, independent contractors, customers and partners.

As part of this pillar, we focus on Roadway Health & Safety, Workplace Health & Safety, Independent Contractor Practices, and DEI&B Practices.

For instance, we employ, maintain, and monitor a robust Health and Safety program for all of our workers which establishes procedures and policies to prevent workplace incidents.

As part of our assessment, we have identified improvement activities to develop a comprehensive Emergency Preparedness Plan (“EPP”) for all our facilities.

The EPP is under development and in compliance with OSHA 29 CFR 1910 standards and FMCSA 49 CFR.

When completed, we will distribute and maintain this EPP for employees and independent contractors alike, across our facilities and corporate offices.

The EPP is under

development and in compliance with OSHA 29 CFR 1910 standards and FMCSA 49 CFR.

When completed, we will distribute and maintain this EPPP for employees and independent contractors alike, across our facilities and corporate offices.

We also remain committed to fostering a more diverse, equitable and inclusive work environment.

In 2020, we created a Diversity, Equity, Inclusion, and Belonging (DEI&B) Council to promote employee inclusion and engagement.

Since the creation of the DEI&B Council, among other initiatives, we have implemented paid parental leave, launched Employee Resource Groups to foster an inclusive environment and celebrated different cultures by commemorating key diversity holidays, observances, celebrations and provided floating paid holidays.

We are committed to supporting and giving back to the communities where we live and work, particularly through the support of our employee Veterans, and to the community of Veterans in North America.

We continue to support our Veterans through our charitable organization, Operation:

For instance, we continue to support our Veterans through our charitable organization, Operation:

Forward Freedom, a manifestation of our ongoing commitment to Veteran-related causes.

Operation Forward Freedom’s largest fundraising event is intended to be The Inaugural Drive for Hope Golf tournament.

In 2020 and 2021, the Inaugural Drive For Hope Golf Tournament was postponed due to COVID-19.

The Drive For Hope Golf Tournament is scheduled to take place in 2022.

We also partner with non-profit organizations that positively impact our communities and our industry.

Through our partnership with Truckers Against Trafficking, we have conducted training for over-the-road drivers to educate and equip them with the tools needed to combat human trafficking.

We partner with Women in Trucking to encourage and promote the employment of women within our industry.

Our team of drivers is currently comprised of 15% women, roughly twice the U.S.

industry average, and we continue to seek opportunities to improve upon that percentage.

We are committed to promoting a healthier natural environment by striving for continuous environmental improvements in all aspects of our business.

We are currently reducing emissions and energy consumption through several ongoing programs and is committed to tracking and reducing our GHG emissions and improving energy efficiency.

In 2022, we hosted our first annual Drive for Hope Golf tournament where we raised more than $375,000 for Hope for the Warriors.

Hope for the Warriors is a 501c3 nonprofit whose mission is to care for and empower service members and military families challenged by the physical, moral and psychological effects of war.

We also partner with non-profit organizations that positively impact our communities and our industry such as Truckers Against Trafficking, Women in Trucking and Drexel Hamilton.

We are committed to providing the industry's highest quality service in delivering on our customers' expectations.

As part of this pillar, we focus on Measurement & Disclosure, Information Security, and Responsible Supplier Practices.

We remain committed to transparent and sustainable business practices.

As part of this ongoing commitment, we have transformed and innovated several of our digital and cloud technologies to create more efficient and integrated processes.

We deploy various programs, including Safety and Environmental Management Systems, to collect meaningful data that is communicated with all divisions and management.

We have also employed proactive measures to protect our network, computer systems and data from cyber threats, in part, by creating a robust Information Security program in early 2020.

We are continuously deploying infrastructure to meet the National Institute of Standards and Technology (NIST) requirements.

As part of our Responsible Supplier program, we work to understand the ESG goals of both our suppliers and customers.

By 2024, we expect to establish data tracking infrastructure and explore opportunities to grow our supplier diversity program and partnerships.

We aim to establish supplier diversification goals in the coming years.

We are committed to promoting a healthier natural and built environment by striving for continuous environmental improvements in all aspects of our business.

Environmental leadership requires not only our own action, but transparency and participation in the industry, including conversations about innovations and advancements that make a difference.

As part of this pillar, we focus on GHG Emissions Reduction Practices and Air Quality Practices.

As a transportation company, we are conscious of the environmental effects of our operations and are committed to tracking and reducing our GHG emissions and improving our energy efficiency.

We have established a preliminary goal to reduce absolute Scope 1 and Scope 2 GHG emissions (combined) by 2030 from a 2021 base year.

As part of this goal, in 2022, we partnered with carbon capture company Remora, reserving ten of its mobile devices for a pilot project tentatively scheduled for the second half of 2023.

We are also aligning with industry certifications, continuing to be a SmartWay certified company.

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Environmental Protection Agency (“EPA”) verifying company compliance with EPA regulations, including fuel efficiency ranges and emission standards.

In 2021, we published our first ESG Report outlining our commitments and associated focus areas.

Since publication, we have been focused on data aggregation.

In our future reporting, we will incorporate data requirements identified by widely accepted sustainability frameworks (CDP, SASB, GRI, etc.) and set measurable targets and goals for our priority areas.

We are committed to making our results count across the country and will continue to update our future disclosures accordingly.

To learn more about our ESG strategy and all our focus areas, visit our ESG website, https://forwardair.metrio.net/ , also accessible through our investor relations site.

The information in our ESG report is not incorporated into, and is not a part of, this report.

We are committed to making our results count and will continue to update our future disclosures accordingly.

Risk Management and Litigation

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Truckload business $ 2,000 Occurrence/Accident² $0 to $2,000 10/1/2022 to 10/1/2023

LTL business $ 6,000 Policy Term Aggregate³ $3,000 to $5,000 10/1/2021 to 10/1/2022

LTL, Truckload and Intermodal businesses $ 5,000 Policy Term Aggregate³ $5,000 to $10,000 10/1/2022 to 10/1/2023

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¹ Excluding the Final Mile business, which is primarily a brokered service.

² For each and every accident, we are responsible for damages and defense up to these amounts, regardless of the number of claims associated with any accident.

³ During the Policy Term, we are responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Risk Retention before insurance will respond.

² For each and every accident/incident, we are responsible for damages and defense up to these amounts, regardless of the number of claims associated with any accident/incident.

³ During the Policy Term, we are responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Risk Retention before insurance will contribute.

Also, from time to time, when brokering freight, we may face claims for the “negligent selection” of outside, contracted carriers that are involved in accidents, and we maintain third-party liability insurance coverage with a $100 deductible per occurrence for most of our brokered services.

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In addition, we may be unable to maintain insurance coverage at a reasonable cost or in sufficient amounts or scope to protect us against losses.

From time to time, we are a party to litigation arising in the normal course of our business, most of which involve claims for personal injury, property damage related to the transportation and handling of freight, or workers’ compensation.

From time to time, we are a party to other litigation arising in the normal course of our business, most of which involve claims for personal injury, property damage related to the transportation and handling of freight, or workers’ compensation.

We do not believe that any of these pending actions, individually or in the aggregate, will have a material adverse effect on our business, financial condition or results of operations.

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Additionally, our Canada business activities are subject to similar requirements imposed by the laws and regulations of Canada, as well as its provincial laws and regulations.

Regulatory requirements, and changes in regulatory requirements, may

affect our business or the economics of the industry by requiring changes in operating practices or by influencing the demand for and increasing the costs of providing transportation services.

Regulatory requirements, and changes in regulatory requirements, may affect our business or the economics of the industry by requiring changes in operating practices or by influencing the demand for and increasing the costs of providing transportation services.

Service Marks

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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 1. Business