What changed in this filing

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Item 1. Business

2023-02-24 compared with 2022-02-25 · 130 added, 59 removed, 117 unchanged (62% of the section changed)

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We believe that fostering long-term customer relationships is critical to our success and allows us to better understand our customers’

needs and specifically tailor our transportation services to them.

needs and specifically tailor the transportation and logistics services we provide to them.

Our top 50 customers represent approximately 63% of revenue for the year ended December 31, 2022 while one customer accounted for more than 10% of our annual revenue.

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A significant portion of our revenue and earnings is related to the provision of services to customers who serve consumer end markets in North America.

As such our business generally experiences a higher level of demand during the time leading up to the December holidays, as our customers seek to build their inventories by moving goods into their distribution centers and retail store locations in the second half of the calendar year.

As such our business generally experiences a higher level of demand during the time leading up to the December holidays, as our customers seek to build their inventories by moving their goods into distribution centers (both their own, as well as locations that we operate) and retail store locations in the second half of the calendar year.

The transportation and logistics services industry is highly competitive.

We compete against intermodal providers, logistics companies, third-party brokers, trucking carriers, transportation management providers, warehousing providers and railroads that market their own services.

Competition is based primarily on freight rates, quality of service, reliability, transit time and scope of operations.

Several transportation service companies and trucking companies, and all of the major railroads, may have substantially greater financial and other resources than we do.

Competition is based primarily on rates charged for services provided, quality of service, reliability, transit time and scope of operations.

Several transportation and logistics services providers and trucking companies, and all of the major railroads, may have substantially greater financial and other resources than we do.

Our service offering facilitates our customers’

desires for energy-efficient transportation solutions and assists in meeting their objectives to reduce their environmental footprint.

desires for energy-efficient transportation and logistics solutions and assists in meeting their objectives to reduce their environmental footprint.

Our intermodal service is significantly more fuel efficient as compared to trucking transportation, and we continually seek opportunities to convert our customers’

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We are an Environmental Protection Agency (EPA) SmartWay® Transport Partner, having been awarded the EPA’s SmartWay® Excellence Award nine times since 2008.

Our headquarters building in Oak Brook, IL is certified as “Gold”

Our headquarter buildings in Oak Brook, IL are certified as “Gold”

by the Leadership in Energy and Environmental Design (LEED®) organization.

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We are committed to investing in technology to facilitate the growth of our business while enabling efficiency in our operations.

Our digital strategy leverages advanced technology for our core operating systems, while investing in emerging technologies to achieve our business goals and enable innovative solutions for our stakeholders which include customers, drivers, vendors and employees.

For example, in 2021 we completed the rollout of technology solutions to our trucking field operations.

This enables our operating teams to more easily share driver capacity across our terminals and service lines and provides a single state of the art mobile experience to our drivers on our HubPro mobile app.

In 2021, we also delivered solutions using computer visioning, robotic process automation and artificial intelligence to create increased efficiency in our operations and back office functions.

This included the automation of manual processes, using human augmentation solutions to allow our experienced supply chain professionals to make critical decisions while allowing a robot to complete the repeatable tasks, and developing learning-based robots to drive better decision support to the hands of operating teams.

Our digital strategy leverages advanced technology for our core operating systems, while we invest in emerging technologies to achieve our business goals and enable innovative solutions for our stakeholders, which include customers, drivers, vendors and employees.

Consistent with our strategy of acquiring companies that strengthen our offering to our customers, in 2022 we achieved system integration of Choptank and TAGG into our tech landscape which enabled cross-selling of our brokerage and fulfillment services for our expended customer base.

We continue to make significant investment in refreshing critical technology for key functions including customer management, pricing, and order to cash processes, while enabling advanced technologies for data mining and trend analysis.

We carry commercial general liability insurance subject to a policy aggregate limit, and trucker’s automobile liability insurance with a limit per occurrence.

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Today we generate over $5 billion in annual revenue, having grown through the addition of new customers, through cross-selling our services to our customer base, by investing in equipment such as containers and tractors, by developing new service offerings, and through the acquisitions of new business lines.

For example, over the past several years we have invested in a fleet of refrigerated intermodal containers that represents a new service line for us which we have effectively marketed to our existing customer base.

For example, over the past several years we have invested in a fleet of refrigerated intermodal containers that represents a new service line which we marketed to our existing customer base.

We regularly evaluate acquisition and divesture transactions as a component of our strategy to enhance our core business lines and diversify our service offerings.

Our recent strategic transactions include the following:

TAGG Acquisition.

On August 22, 2022, we acquired 100% of the equity interests of TAGG Logistics, LLC (“TAGG”

The acquisition expanded our presence in the consolidation and fulfillment space and added a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs.

The acquisition added scale to our logistics service line and has enabled cross-selling opportunities.

The financial results of TAGG, since the date of acquisition, are primarily included in our logistics line of business.

Choptank Acquisition.

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Services Provided

As part of our profit improvement initiatives, we have focused on realizing efficiencies between our drayage trucking operation (which supports our intermodal service) and our dedicated trucking operation, including through the sharing of equipment and drivers, and by leveraging a combined set of driver support services including driver recruiting, asset management and safety functions.

As a result, beginning in first quarter of 2022, we report revenue for these operations under the “Intermodal and Transportation Solutions”

line of business.

We operate the following lines of business:

We offer high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking.

Intermodal and transportation solutions.

Our intermodal and transportation solutions line of business offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking.

Our service offering is well positioned to assist our customers in reducing their transportation spend and achieving their carbon emissions objectives.

As an intermodal provider, we arrange for the movement of our customers’

freight in containers, typically over long distances of 750 miles or more.

freight in one of our containers, typically over long distances of 750 miles or more.

We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals.

Local pickup and delivery services between origin or destination and rail terminals (referred to as “drayage”) are provided by our Hub Group Trucking, Inc.

(“HGT”) subsidiary and third-party local trucking companies.

In a typical intermodal transaction, the customer places an order with us and we determine the price and arrange for the necessary intermodal equipment (which includes a container and chassis) to be delivered to the customer by HGT or a third-party drayage company.

We arrange for the transportation of the loaded container to a rail terminal where it is transported by a railroad to the destination rail terminal.

Our predictive track and trace technology then monitors the shipment to ensure that it arrives as scheduled and provides notification to our customer service personnel if there are service delays.

We then arrange for transportation by a drayage company from the rail terminal to the destination.

After unloading, the empty container is made available for the next transaction.

Local pickup and delivery services (referred to as “drayage”) between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract.

Our predictive track and trace technology monitors the shipment to ensure that it arrives as scheduled and provides notification to our customer service personnel if there are service delays.

As of December 31, 2022, we owned approximately 48,000 dry, 53-foot containers and 750 refrigerated 53-foot containers.

We also exclusively leased approximately 225 dry, 53-foot containers.

During 2021, HGT accounted for approximately 50% of Hub’s drayage needs by providing reliable, cost effective transportation services to our customers.

As of December 31, 2021, HGT operated trucking terminals at 25 locations throughout the United States, with locations in many large metropolitan areas.

As of December 31, 2021, HGT owned approximately 1,400 tractors and 200 trailers, employed approximately 1,400 drivers and contracted with approximately 800 owner-operators.

Our logistics business offers a wide range of transportation management services and technology solutions including shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, and shipment visibility.

We offer multi-modal transportation services including full truckload, LTL, intermodal, final mile, railcar, small parcel and international transportation.

We leverage proprietary technology along with collaborative relationships with third party service providers to deliver cost savings and performance-enhancing supply chain services to our clients.

Our transportation management offering also serves as a source of volume for our intermodal and truck brokerage service lines.

Our logistics offering also includes warehousing, cross-docking and consolidation services.

Many of the customers for these solutions are consumer goods companies who sell into the retail channel.

We do not own or operate any warehouses or cross-docks.

We contract with third-party warehouse providers in seven markets across North America to which our customers ship their goods to be stored and consolidated, along with goods from other customers, into full truckload shipments destined to major retailers.

These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’

increasingly stringent supply chain requirements.

In December 2020, we acquired NSD which added residential final mile transportation services to our logistics offering.

Our final mile services include warehousing, product assembly, inbound transportation to warehouses, delivery of goods to residential locations, and reverse logistics services.

Customers for our final mile services include retailers and consumer goods companies.

We contract with nearly 200 agents across the United States who provide warehousing and transportation to support our final mile offering.

As of December 31, 2022, our trucking transportation operation consisted of approximately 2,300 tractors, 3,000 employee drivers and 4,600 trailers.

We also contract for services with approximately 750 independent owner-operators who supply their own equipment and operate under our regulatory authority.

These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs.

Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.

During 2022, approximately 55% of Hub’s drayage needs were provided by our own drivers and tractors, or by owner operators with whom we contracted.

As of December 31, 2022, we operated trucking terminals at 26 locations throughout the United States, with locations in many large metropolitan areas.

Truck Brokerage.

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We offer a full range of trucking transportation services, including dry van, expedited, less-than-truckload, refrigerated and flatbed.

We substantially increased the size of our brokerage service line and increased our refrigerated transportation capabilities through the acquisition of Choptank Transport, LLC in October 2021 (“Choptank”).

In addition, we intend to deploy Choptank’s best-in-class technology platform across our existing brokerage operation, which we expect will result in improved efficiency.

Our dedicated trucking operation contracts with customers who require high service transportation using equipment dedicated to their needs.

We offer a dedicated fleet of equipment and drivers to each customer, as well as the management and infrastructure to operate according to the customer’s high service expectations.

Contracts with customers generally include fixed and variable pricing arrangements and may include charges for early termination which serves to reduce the financial risk we bear with respect to the utilization of our equipment.

Our dedicated operation currently operates a fleet of approximately 1,000 tractors and 4,600 trailers at 68 locations throughout the United States.

As of December 31, 2021, dedicated employed approximately 1,100 drivers.

We substantially increased the size of our brokerage service line and increased our refrigerated transportation capabilities through the acquisition of Choptank in October 2021.

We offer multi-modal transportation services including full truckload, LTL, intermodal, final mile, railcar, small parcel and international transportation.

We leverage proprietary technology along with collaborative relationships with third-party service providers to deliver cost savings and performance-enhancing supply chain services to our clients.

Our transportation management offering also serves as a source of volume for our intermodal and truck brokerage service lines.

Our logistics offering also includes warehousing, fulfillment, cross-docking and consolidation services.

Many of the customers for these solutions are consumer goods companies who sell into the retail channel.

Our business operates or has access to approximately 9.5 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations.

These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’

increasingly stringent supply chain requirements.

In August 2022, we acquired TAGG which enhanced our presence in the consolidation and fulfillment space and added a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs.

The acquisition added scale to our logistics service line and has resulted in cross-selling opportunities.

In December 2020, we acquired NSD which added residential final mile transportation services to our logistics offering.

Our final mile services include warehousing, product assembly, inbound transportation to warehouses, delivery of goods to residential locations, and reverse logistics services.

Customers for our final mile services include retailers and consumer goods companies.

We contract with nearly 200 vendors across the United States who provide warehousing and transportation to support our final mile offering.

Relationships with Transportation and Warehouse Vendors

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On a regular basis, our senior executives and our railroad providers meet to discuss major strategic issues concerning intermodal transportation.

Approximately half of our drayage services are provided by HGT which owns a fleet of approximately 1,400 tractors and employs approximately 1,400 drivers.

In addition, HGT contracts with approximately 800 owner-operators who supply their own equipment and operate under our regulatory authority.

Approximately 55% of our drayage services are provided by our fleet.

We contract with approximately 750 owner-operators who supply their own equipment and operate under our regulatory authority.

We also procure drayage services from third parties, and we believe we are one of the largest purchasers of drayage transportation in the United States.

Our dedicated services are generally handled by our fleet of approximately 1,000 tractors and 4,600 trailers and approximately 1,100 drivers.

Our brokerage and logistics business lines are significant purchasers of truckload and less-than-truckload transportation from third- parties.

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We have relationships with several national and local operators of warehouses and cross-dock facilities who provide a range of services to us including storage, product handling and related activities.

Our final mile operation contracts with nearly 200 local agents who provide warehousing and local delivery services.

We require all of our trucking vendors to carry general liability insurance, truckman’s auto liability insurance and cargo insurance.

We also operate our own warehouse locations which are leased from third-party landlords.

Our final mile operation contracts with nearly 200 vendors across the United States who provide warehousing and delivery services.

We require all of our trucking vendors to carry truckman’s auto liability insurance and cargo insurance.

Railroads, which are self-insured, provide limited cargo protection.

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Our business is also subject to requirements published by the United States Food and Drug Administration under the Food Safety Modernization Act regarding the use of sanitary transportation practices to ensure the safety of food transported by motor vehicle and rail.

To date, compliance with these regulations and licensing requirements has not had a material adverse effect on our capital expenditures, earnings or competitive positions.

To date, compliance with these regulations and licensing requirements has not had a material adverse effect on our capital expenditures, earnings or competitive position.

There are federal, state and local laws and regulations concerning environmental matters and employee health and safety that apply to the Company’s operations.

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Custom-Trade Partnership Against Terrorism

One of our subsidiaries achieved Custom-Trade Partnership Against Terrorism (C-TPAT) certification in 2013 and have maintained it since then.

One of our subsidiaries achieved Custom-Trade Partnership Against Terrorism (“C-TPAT”) certification in 2013 and have maintained it since then.

C-TPAT is a voluntary supply chain security program led by United States Customs and Border Protection focused on improving the security of private companies’

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Human Capital

Hub conducts business and provides services to customers through a combination of non-driver ( e.g.

, office or terminal-based) employees, driver employees, and relationships with independent contractors.

As of December 31, 2021, Hub had approximately 4,700 employees, which included approximately 2,400 drivers.

In addition, as of December 31, 2021 we contracted with approximately 800 independent contractor drivers.

We do not employ any warehouse operations staff.

Hub conducts business with and provides services to customers through a combination of office employees, driver employees and warehouse employees.

We also contract with independent contractors and with staffing firms who provide personnel who provide their services in our warehouse operations.

As of December 31, 2022, Hub had approximately 5,900 employees, which included approximately 3,000 drivers and 700 warehouse employees.

In addition, as of December 31, 2022, we contracted with approximately 750 independent contractor drivers and had approximately 400 contractors working in our warehouse locations.

We are not a party to any collective bargaining agreements and consider our relationship with our employees to be satisfactory.

Hub’s success depends in part on our ability to attract and retain skilled staff members and drivers.

Hub’s success depends in part on our ability to attract and retain skilled staff members, drivers and warehouse employees.

Our executive management team receives regular updates regarding headcount changes, turnover rates, hiring rates, manager training and employee satisfaction.

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Hub strives to create a culture of accountability, safety and teamwork.

We set annual performance goals for our operations teams relative to collisions and injuries and track performance monthly and year-to-date to ensure accountability.

We set annual performance goals for our operations teams relative to collisions and injuries and track performance monthly to ensure accountability.

Further, we provide company-wide recognition on a monthly basis for employees who are nominated for performance that demonstrates our guiding principles of winning together, innovating with purpose and acting with integrity.

Information About Our Executive Officers

There exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was selected.

The table sets forth certain information as of February 1, 2023 with respect to each person who is an executive officer of the Company.

Executive Chairman of the Board of Directors

President and Chief Executive Officer

Executive Vice President and Chief Operating Officer

Executive Vice President, Chief Financial Officer and Treasurer

Executive Vice President and Chief Accounting Officer

Executive Vice President and Chief Information Officer

Executive Vice President and Chief Human Resources Officer

Executive Vice President, General Counsel and Corporate Secretary

Yeager has served as the Executive Chairman of our Board of Directors since January 2023.

Yeager previously served as Chairman of the Board between November 2008 and December 2022 and as Chief Executive Officer between March 1995 and December 2022.

From March 1995 through November 2008, Mr.

Yeager served as Vice Chairman of the Board.

From October 1985 through December 1991, Mr.

Yeager was President of Hub City Terminals (Hub Chicago).

From 1983 to October 1985, he served as Vice President, Marketing of Hub Chicago.

Yeager founded our St.

Louis office in 1980 and served as its President from 1980 to 1983.

Yeager founded our Pittsburgh office in 1975 and served as its President from 1975 to 1977.

Yeager received a Masters of Business Administration degree from the University of Chicago Booth School of Business and a Bachelor of Arts degree from the University of Dayton.

Yeager is the father of Phillip D.

Yeager became our President and Chief Executive Officer on January 1, 2023.

Prior to this appointment, Mr.

Yeager served as President and Chief Operating Officer since July 2019, and as Chief Commercial Officer overseeing Intermodal and Truck Brokerage operations as well as sales, pricing, solutions and account management since January 2018.

Yeager formerly held the role of Executive Vice President, Account Management and Intermodal Operations since January 2016 after serving as Vice President of Account Management and Business Development from February 2014 to January 2016.

Yeager joined the Company in 2011 as the Director of Strategy and Acquisitions.

Prior to joining the Company, Mr.

Yeager served as Assistant Vice President of Commercial Banking at BMO Harris Bank, and as an investment banking analyst for Lazard Freres & Co.

Yeager earned his Bachelor of Arts degree from Trinity College and a Master of Business Administration degree from the University of Chicago Booth School of Business.

Yeager is the son of David P.

Alexander became our Executive Vice President and Chief Operating Officer on January 1, 2023.

Alexander previously served as Executive Vice President, Logistics between September 2015 and December 2022.

Before being named Executive Vice President, Mr.

Alexander served as Vice President of Operations of Logistics from December 2010 to September 2015 and was responsible for the operational execution and excellence for manufacturing, retail and consumer packaged goods clients.

Prior to that, Mr.

Alexander was Senior Director of Strategic Accounts, where he had a ten-year history of managing and directing continuous improvement initiatives for key accounts.

Alexander earned a Bachelor of Business Administration degree from Marquette University and Masters of Business Administration degree from Cardinal Stritch University.

DeMartino has served as Executive Vice President, Chief Financial Officer and Treasurer since July 2020.

In this role Mr.

DeMartino has responsibility for our financial reporting, financial operations, investor relations, debt and equity financing, and corporate development activities.

DeMartino joined the Company in 2016 as Vice President, Corporate Development and Strategy and led our acquisition and divestiture activities.

Prior to joining the Company he spent over 15 years in various financial roles, including corporate development and investment banking.

DeMartino received a Bachelor’s degree in Economics from Northwestern University.

Beth has served as Executive Vice President and Chief Accounting Officer since July 2020.

Beth joined the Company in October 2003 as Corporate Controller and served as Controller and Assistant Treasurer beginning in March 2007.

He has been instrumental in transforming the Company’s financial systems and leading the accounting organization through the integration of acquisitions, divestures, and implementation of accounting standards.

Beth is a Certified Public Accountant and held various auditing and corporate accounting positions prior to joining the Company.

Beth received a Bachelor of Science degree in Accounting from the University of Illinois.

Dhruv Bansal was named Executive Vice President and Chief Information Officer in March 2022.

Previously, Mr.

Bansal served as Senior Vice President of Application Development and was responsible for the development, configuration, and delivery of Hub’s software as well as the product development strategy, architecture, and technical solutions.

Bansal has spent over 20 years in engineering and product development roles.

Before joining Hub in 2020, Mr.

Bansal served as Vice President Transport IT Solutions for XPO Logistics, Inc.

where he led IT for multiple North American transportation business units and was Vice President, Product Development at E2Open, a developer of a SaaS-based supply-chain management platform.

Bansal earned a Master of Business Administration degree from the Indian Institute of Management in Ahmedabad, India and a Bachelor’s degree in Engineering from V.J.T.I.

in Bombay, India.

McDermott joined the Company in August 2019 as our Executive Vice President and Chief Human Resources Officer (“CHRO”).

McDermott has nearly 25 years of experience in human resources and, prior to joining the Company, served as Senior Vice President of Human Resources at Assurance Agency, an insurance brokerage, from October 2015 through July 2019 and in a variety of executive roles at National Express Corporation prior to her employment with Assurance Agency.

McDermott is responsible for developing the Company’s employees, managing diverse workforces and implementing strategic plans for benefits, safety programs and technology systems.

McDermott earned a Bachelor of Science in Business Administration from Lewis University and a Master of Business Administration, Operations and Finance from DePaul University’s Kellstadt Graduate School of Business.

McDermott is a Society for Human Resources Management Senior Certified Professional and has received her Senior Professional in Human Resources certification from the HR Certification Institute.

LaFrance joined the Company as Executive Vice President, General Counsel and Corporate Secretary in August 2021.

In this role, Mr.

LaFrance leads the Company’s legal, compliance and governance efforts.

LaFrance has over 30 years of global legal experience in multiple sectors, including having served as general counsel of General Electric Company's transportation and security technology divisions, as well as senior legal roles at Wabtec Corporation, National Grid plc and United Technologies Corporation.

Earlier in his career, Mr.

LaFrance was a partner at the law firm Goodwin Proctor.

LaFrance graduated with a Bachelor of Arts degree in Economics from Boston College and received his J.D.

from Georgetown University Law Center.

Available Information

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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