What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-25 compared with 2020-02-27 · 116 added, 466 removed, 167 unchanged (78% of the section changed)

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Our risks are grouped into the following risk categories:

*Industry and Competition

*Company Growth

*Trucking Industry Regulation

*Capital Requirements

*Market Changes

*Environmental Regulation

*Macroeconomic Changes

*Independent Contractors

*Insurance Regulation

*Mergers and Acquisitions

*Vendors and Suppliers

*Goodwill and Intangibles

*International Operations

*Common Stock

Strategic Operational Compliance Financial

*Industry and Competition *Company Growth *Trucking Industry Regulation *Capital Requirements

*Market Changes *Employees *Environmental Regulation *Debt

*Macroeconomic Changes *Independent Contractors *Insurance Regulation *Investments

*Mergers and Acquisitions *Vendors and Suppliers *Goodwill and Intangibles

*International Operations *Customers

*Information Systems

Strategic Risk

Our business is subject to general economic, credit, business, and regulatory factors affecting the truckload industry that are largely beyond our control, any of which could have a materially adverse effect on our results of operations.

Our business is subject to economic, credit, business, and regulatory factors affecting the truckload industry that are largely beyond our control, any of which could have a materially adverse effect on our results of operations.

The truckload industry is highly cyclical, and our business is dependent on a number of factors that may have a materially adverse effect on our results of operations, many of which are beyond our control.

We believe that some of the most significant of these factors include (1) excess tractor and trailer capacity in the trucking industry in comparison with shipping demand;

(2) declines in the resale value of used equipment;

(3) recruiting and retaining qualified driving associates;

(4) strikes, work stoppages, or work slowdowns at our facilities or at customer, port, border crossing, or other shipping-related facilities;

(5) increases in interest rates, fuel, taxes, tariffs, tolls, and license and registration fees;

(6) industry compliance with ongoing regulatory requirements;

and (7) rising costs of healthcare.

We are also affected by (1) recessionary economic cycles, such as the period from 2007 through 2009 and the 2016 and 2019 freight environments, which were characterized by weak demand and downward pressure on rates;

(2) changes in customers' inventory levels and practices, including shrinking product/package sizes, and in the availability of funding for their working capital;

(3) changes in the way our customers choose to source or utilize our services;

and (4) downturns in our customers' business cycles.

Economic conditions may adversely affect our customers and their demand for and ability to pay for our services.

Customers encountering adverse economic conditions represent a greater potential for loss and we may be required to increase our allowance for doubtful accounts.

Economic conditions that decrease shipping demand or increase the supply of available tractors and trailers can exert downward pressure on rates and equipment utilization, thereby decreasing asset productivity.

The risks associated with these factors are heightened when the US economy is weakened, such as the period from 2007 through 2009.

Some of the principal risks during such times, which risks Knight and Swift have experienced during prior recessionary periods, are as follows:

we may experience a reduction in overall freight levels, which may impair our asset utilization;

freight patterns may change as supply chains are redesigned, resulting in an imbalance between our capacity and our customers' freight demand;

customers may experience credit issues and cash flow problems, resulting in an inability to compensate us for rendered services;

customers may solicit bids for freight from multiple trucking companies or select competitors that offer lower rates in an attempt to lower their costs, and we might be forced to lower our rates or lose freight;

we may be forced to accept more freight from freight brokers, where freight rates are typically lower;

we may need to incur significantly more non-paid empty miles and other non-revenue miles to obtain loads;

lack of access to current sources of credit or lack of lender access to capital, leading to an inability to secure credit financing on satisfactory terms, or at all.

We are also subject to potential increases in various costs and other events that are outside of our control that could materially reduce our profitability if we are unable to increase our rates sufficiently.

Such cost increases include, but

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are not limited to, fuel and energy prices, driving associate and non-driver employee wages, purchased transportation costs, taxes and interest rates, tolls, license and registration fees, insurance premiums and claims, revenue equipment and related maintenance costs, tires and other components, and healthcare and other benefits for our employees.

We could be affected by strikes or other work stoppages at our terminals, or at customer, port, border, or other shipping locations.

Further, we may not be able to appropriately adjust our costs and staffing levels to changing market demands.

In periods of rapid change, it is more difficult to match our staffing level to our business needs.

Changing impacts of regulatory measures could impair our operating efficiency and productivity, decrease our operating revenues and profitability, and result in higher operating costs.

From time-to-time, various US federal, state, or local taxes are also increased, including taxes on fuels.

We cannot predict whether, or in what form, any such increase applicable to us will be enacted, but such an increase could adversely affect our results of operations and profitability.

In addition, we cannot predict future economic conditions, fuel price fluctuations, revenue equipment resale values, or how consumer confidence, macroeconomic conditions, or production capabilities, could be affected by actual or threatened outbreaks of disease or other public health risks, armed conflicts or terrorist attacks, government efforts to combat terrorism, military action against a foreign state or group located in a foreign state, or heightened security requirements.

The risks associated with these factors are heightened when the US economy is weakened.

During such times, we may a experience a reduction in overall freight levels and freight patterns may change as supply chains are redesigned, resulting an imbalance between our capacity and our customers’ freight demands.

We cannot predict future economic conditions, fuel price fluctuations, cost increases, revenue equipment resale values, or how consumer confidence, macroeconomic conditions, or production capabilities, could be affected by armed conflicts or terrorist attacks, government efforts to combat terrorism, military action against a foreign state or group located in a foreign state, or heightened security requirements.

Enhanced security measures in connection with such events could impair our operating efficiency and productivity and result in higher operating costs.

We operate in a highly competitive and fragmented industry, and numerous competitive factors could limit growth opportunities and could have a materially adverse effect on our results of operations.

We operate in a highly competitive industry, which includes thousands of trucking and logistics companies.

In our truckload operations, we primarily compete with other capacity providers that provide dry van, temperature-controlled, and drayage services similar to those we provide.

Less-than-truckload carriers, private carriers, intermodal companies, railroads, logistics, brokerage, and freight forwarding companies compete to a lesser extent with our truckload operations but are direct competitors of our brokerage, intermodal, and logistics operations.

We transport or arrange for the transportation of various types of freight, and competition for such freight is based mainly on customer service, efficiency, available capacity and shipment modes, and rates that can be obtained from customers.

Such competition in the transportation industry could adversely affect our freight volumes, the freight rates we charge our customers, or profitability and thereby limit our business opportunities.

Additional factors may have a materially adverse effect on our results of operations.

These factors include the following:

We operate in a highly competitive industry.

The following factors could limit our growth opportunities and have a materially adverse effect on our results of operations:

• many of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth rates in the economy, which may limit our ability to maintain or increase freight rates or maintain or grow profitability of our business;

many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some of our business to competitors;

many customers reduce the number of carriers they use by selecting "core carriers" as approved service providers or by engaging dedicated providers, and in some instances we may not be selected;

some of our customers operate their own private trucking fleets and they may decide to transp ort more of their own freight;

we may increase the size of our fleet during periods of high freight demand during which our competitors also increase their capacity, and we may experience losses in greater amounts than such competitors during subsequent cycles of softened freight demand if we are required to dispose of assets at a loss to match reduced customer demand;

the market for qualified drivers is increasingly competitive, and our inability to attract and retain driving associates could reduce our equipment utilization or cause us to increase driving associate compensation, both of which would adversely affect our profitability;

• some of our customers operate their own private trucking fleets and they may decide to transport more of their own freight;

• competition from non-asset-based and other logistics and freight brokerage companies may adversely affect our customer relationships and freight rates;

the continuing trend toward consolidation in the trucking industry may result in more large carriers with greater financial resources and other competitive advantages, with which we may have difficulty competing;

economies of scale that procurement aggregation providers may pass on to smaller carriers may improve their ability to compete with us;

• advances in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments;

• our brand names are valuable assets that are subject to the risk of adverse publicity (whether or not justified), which could result in the loss of value attributable to our brand and reduced demand for our services.

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advances in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to accept higher freight rates to cover the cost of these investments;

the Knight and Swift brand names are valuable assets that are subject to the risk of adverse publicity (whether or not justified), which could result in the loss of value attributable to our brand and reduced demand for our services;

higher fuel prices and, in turn, higher fuel surcharges to our customers may cause some of our customers to consider freight transportation alternatives, including rail transportation.

Increased prices for new revenue equipment, design changes of new engines, decreased availability of new revenue equipment, future use of autonomous trucks, and the failure of manufacturers to meet their sale or trade-back obligations to us could have a materially adverse effect on our business, financial condition, results of operations, and profitability.

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We have experienced an increase in prices for new tractors over the past few years, and the resale value of the tractors has not increased to the same extent.

Prices have increased and may continue to increase, due to, among other reasons, (1) increases in commodity prices;

(2) government regulations applicable to newly manufactured tractors, trailers, and diesel engines;

and (3) the pricing discretion of equipment manufacturers.

In addition, the engines installed in our newer tractors are subject to emissions control regulations issued by the EPA and certain states.

Increased regulation has increased the cost of our new tractors and could impair equipment productivity, in some cases, resulting in lower fuel mileage, and increasing our operating expenses.

Further regulations with stricter emissions and efficiency requirements have been proposed that would further increase our costs and impair equipment productivity.

These adverse effects, combined with the uncertainty as to the reliability of the vehicles equipped with the newly designed diesel engines and the residual values realized from the disposition of these vehicles, could increase our costs or otherwise adversely affect our business or operations as the regulations become effective.

Over the past several years, some manufacturers have significantly increased new equipment prices, in part to meet new engine design and operations requirements.

Our business could be harmed if we are unable to continue to obtain an adequate supply of new tractors and trailers for these or other reasons.

As a result, we expect to continue to pay increased prices for equipment and incur additional expenses for the foreseeable future.

Furthermore, reduced equipment efficiency may result from new engines designed to reduce emissions, thereby increasing our operating expenses.

Tractor and trailer vendors may reduce their manufacturing output in response to lower demand for their products in economic downturns or shortages of component parts.

A decrease in vendor output may have a materially adverse effect on our ability to purchase a quantity of new revenue equipment that is sufficient to sustain our desired growth rate and to maintain a late-model fleet.

Moreover, an inability to obtain an adequate supply of new tractors or trailers could have a materially adverse effect on our business, financial condition, and results of operations.

We expect to continue to pay increased prices for equipment and incur additional expenses for the foreseeable future.

Furthermore, a decrease in vendor output may have a materially adverse effect on our ability to purchase a quantity of new revenue equipment that is sufficient to sustain our desired growth rate and to maintain a late-model fleet.

We have certain revenue equipment leases and financing arrangements with balloon payments at the end of the lease term equal to the residual value we are contracted to receive from certain equipment manufacturers upon sale or trade back to the manufacturers.

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The prices we expect to receive under these arrangements may be higher than the prices we would receive in the open market.

We may suffer a financial loss upon disposition of our equipment if these vendors refuse or are unable to meet their financial obligations under these agreements, we do not enter into definitive agreements that reflect favorable equipment replacement or trade-in terms, we fail to or are unable to enter into similar arrangements in the future, or we do not purchase the number of new replacement units from the vendors required for such trade-ins.

Used equipment prices are subject to substantial fluctuations based on freight demand, supply of used trucks, availability of financing, presence of buyers for export, and commodity prices for scrap metal.

These and any impacts of a depressed market for used equipment could require us to dispose of our revenue equipment below the carrying value.

This leads to losses on disposal or impairments of revenue equipment, when not otherwise protected by residual value arrangements.

Deteriorations of resale prices or trades at depressed values could cause more losses on disposal or impairment charges in future periods.

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We may suffer a financial loss upon disposition of our equipment if these vendors refuse or are unable to meet their financial obligations under these agreements.

Declines in demand for our used revenue equipment could result in decreased equipment sales, resale values, and gains on sales of assets.

We are sensitive to the used equipment market and fluctuations in prices and demand for tractors and trailers.

Through certain subsidiaries, we sell our used company-owned tractors and trailers that we do not trade in to manufacturers.

The market for used equipment is affected by several factors, including the demand for freight, the supply of used equipment, the availability of financing, the presence of buyers for export to foreign countries, and commodity prices for scrap metal.

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Our truckload operations are dependent upon diesel fuel, and accordingly, significant increases in diesel fuel costs could materially and adversely affect our results of operations and financial condition if we are unable to pass increased costs on to customers through rate increases or fuel surcharges.

Prices and availability of petroleum products are subject to political, economic, geographic, weather-related, and market factors that are generally outside of our control and each of which may lead to fluctuations in the cost of fuel.

Fuel prices are also affected by the rising demand for fuel in developing countries, and could be materially adversely affected by the use of crude oil and oil reserves for purposes other than fuel production and by diminished drilling activity.

Such events may lead not only to increases in fuel prices, but also to fuel shortages and disruptions in the fuel supply chain.

We use a number of strategies to mitigate fuel expense, which is one of our largest operating expenses.

We purchase bulk fuel at many of our terminals and utilize a fuel optimizer to identify the most cost effective fuel centers to purchase fuel over-the-road.

We manage our fuel miles per gallon with a focus on reducing idle time, managing out-of-route miles, and improving the driving habits of our driving associates.

We also continue to update our fleet with more fuel efficient, EPA emission-compliant post-2014 model engines, and to install aerodynamic devices on our tractors and trailers, which lead to fuel efficiency improvements.

Fuel is also subject to regional pricing differences and often costs more on the West Coast and in the Northeast, where we have significant operations.

We use a fuel surcharge program to recapture a portion, but not all, of the increases in fuel prices over a base rate negotiated with our customers.

Our fuel surcharge program does not protect us against the full effect of increases in fuel prices.

The terms of each customer's fuel surcharge agreement varies and customers may seek to modify the terms of their fuel surcharge agreements to minimize recoverability for fuel price increases.

In addition, because our fuel surcharge recovery lags behind changes in fuel prices, our fuel surcharge recovery may not capture the increased costs we pay for fuel, especially when prices are rising.

This could lead to fluctuations in our levels of reimbursement, which have occurred in the past.

During periods of low freight volumes, shippers can use their negotiating leverage to impose fuel surcharge policies that provide a lower reimbursement of our fuel costs.

There is no assurance that such fuel surcharges can be maintained indefinitely or will be sufficiently effective.

Our results of operations would be negatively affected to the extent we cannot recover higher fuel costs or fail to improve our fuel price protection through our fuel surcharge program.

Increases in fuel prices, or a shortage or rationing of diesel fuel, could also materially and adversely affect our results of operations.

We have not historically used derivatives to mitigate volatility in our fuel costs, but we periodically evaluate the benefits of employing this strategy.

As of December 31, 2019 , we did not have any derivative financial instruments to reduce our exposure to fuel price fluctuations.

To mitigate the impact of rising fuel costs, we contract with some of our fuel suppliers to buy fuel at a fixed price or within banded pricing for a specified period, usually not exceeding twelve months.

However, this only covers a small portion of our fuel consumption.

Accordingly, fuel price fluctuations may still negatively impact us.

Fuel is subject to regional pricing differences and often costs more on the West Coast and in the Northeast, where we have significant operations.

While we use a fuel surcharge program to recapture a portion of the increases in fuel prices it does not protect us against the full effect of increases in fuel prices.

Because our fuel surcharge recovery lags behind changes in fuel prices, our fuel surcharge recovery may not capture the increased costs we pay for fuel, especially when prices are rising.

Our results of operations would be negatively affected and more volatile to the extent we cannot recover higher fuel costs or fail to improve our fuel price protection through our fuel surcharge program.

Additionally, a shortage or rationing of diesel fuel, could materially and adversely affect our results of operations.

We are subject to certain risks arising from doing business in Mexico.

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• social, political, and economic instability.

In addition, if we are unable to maintain our Free and Secure Trade ("FAST"), Business Alliance for Secure Commerce ("BASC"), and C-TPAT status, we may have significant border delays.

This could cause our Mexican operations to be less efficient than those of competing capacity providers that have FAST, BASC, and C-TPAT status and operate in Mexico.

We also face additional risks associated with our foreign operations, including restrictive trade policies and duties, taxes, or government royalties imposed by the Mexican government, to the extent not preempted by the terms of the North American Free Trade Agreement ("NAFTA" ), or its proposed replacement, the USMCA, which is waiting for congressional approval.

In addition, changes to NAFTA, USMCA (if enacted), or other treaties governing our business could materially adversely affect our international business.

It is also uncertain how the USMCA, if enacted, will impact foreign trade and our Mexican operations.

We may not make acquisitions in the future, or if we do, we may not be successful in our acquisition strategy.

Historically, acquisitions were a part of Knight's and Swift's growth strategies.

Historically, acquisitions were a part of our growth strategy.

There is no assurance that we will be successful in identifying, negotiating, or consummating any future acquisitions.

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• we may assume liabilities beyond our estimates or what was disclosed to us;

we may be unable to assimilate or integrate the acquired company's operations or assets into our business successfully and realize the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems;

• we may be unable to successfully assimilate or integrate the acquired company's operations or assets into our business and realize the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays or other operational, technical, or financial problems;

• transaction costs and acquisition-related integration costs could adversely affect our results of operations in the period in which such costs are recorded;

• diverting our management's attention from other business concerns;

risks of entering into markets in which we have had no or only limited direct experience;

• risks of entering into new markets or business offerings in which we have had no or only limited prior experience;

• the potential loss of customers, key employees, or driving associates of the acquired company.

We may fail to realize all of the anticipated benefits of the 2017 Merger or those benefits may take longer to realize than expected.

We may also encounter significant difficulties in integrating Knight's and Swift's businesses.

Our ability to realize the anticipated benefits of the 2017 Merger will depend, to a large extent, on our ability to operate the Knight and Swift businesses together in a manner that realizes anticipated synergies.

In order to achieve these expected benefits, we must successfully operate the businesses of Knight and Swift without adversely affecting current revenues and investments in future growth.

If we are unable to successfully achieve these objectives, the anticipated benefits of the 2017 Merger may not be realized fully or at all or may take longer to realize than expected.

In addition, the continued operation of two independent businesses within one company is a complex, costly, and time-consuming process.

As a result, we will be required to devote significant management attention and resources to coordinating their business practices and operations.

This process may disrupt the businesses.

The failure to meet the challenges involved in operating the two businesses within one company and to realize the anticipated benefits of the 2017 Merger could cause an interruption of, or a loss of momentum in, our activities and could adversely affect our results of operations.

The integration of Knight's and Swift's businesses may also result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships or other adverse reactions.

The difficulties of combining the operations of the companies include, among others:

difficulties in integrating functions, personnel, and systems;

challenges in conforming standards, controls, procedures, and accounting and other policies, business cultures, and compensation structures between the two companies;

difficulties in assimilating driving associates and employees and in attracting and retaining key personnel;

challenges in retaining existing customers and obtaining new customers;

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difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combination;

difficulties in managing multiple brands under a significantly larger and more complex company;

contingent liabilities that are larger than expected;

potential unknown liabilities, adverse consequences, and unforeseen increased expenses associated with the 2017 Merger.

Many of these factors are outside of our control and any one of them could result in increased costs, decreased expected revenues and the diversion of management's time and energy, which could materially impact our business, financial condition, and results of operations.

In addition, even if the businesses of Knight and Swift are operated successfully within one company, the full benefits of the transaction may not be realized, including the synergies that are expected.

These benefits may not be achieved within the anticipated time frame, or at all.

Further, additional unanticipated costs may be incurred in operating the businesses of Knight and Swift.

All of these factors could cause dilution to our earnings per share, decrease or delay the expected accretive effect of the 2017 Merger and negatively impact the market price of our common stock.

As a result, it cannot be assured that the combination of Knight and Swift will result in the realization of the full benefits anticipated from the 2017 Merger within the anticipated time frames, or at all.

Operational Risk

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Furthermore, there is no assurance that our operating margins will not be adversely affected by future changes in and expansion of our business or by changes in economic conditions or that we will be able to sustain or improve our profitability in the future.

We have terminals throughout the US that serve markets in various regions.

These operations require the commitment of additional personnel and revenue equipment, as well as management resources, for future development.

Should the growth in our operations stagnate or decline, our results of operations could be adversely affected.

If we expand, it may become more difficult to identify large cities that can support a terminal, and we may expand into smaller cities where there is insufficient economic activity, fewer opportunities for growth, and fewer driving and non-driving associates to support the terminal.

We may encounter operating conditions in these new markets, as well as our current markets, that differ substantially from our current operations, and customer relationships and appropriate freight rates in new markets could be challenging to attain.

We may not be able to duplicate or sustain our operating strategy successfully throughout, or possibly outside of, the US, and establishing terminals and operations in new markets could require more time or resources, or a more substantial financial commitment than anticipated.

Furthermore, the continued progression and development of our logistics business is subject to the risks inherent in entering and cultivating new lines of business, including, but not limited to, (1) initial unfamiliarity with pricing, service, operational, and liability issues;

Furthermore, the continued progression and development of new business offering’s are subject to risks, including, but not limited to:

• initial unfamiliarity with pricing, service, operational, and liability issues;

• customer relationships may be difficult to obtain or we may have to reduce rates to gain and develop customer relationships;

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• insurance and claims may exceed our past experience or estimations;

and (5) we may be unable to recruit and retain qualified personnel and management with requisite experience or knowledge of our logistics services.

• we may be unable to recruit and retain qualified personnel and management with requisite experience or knowledge of our logistics services, and other developing service offerings.

We derive a significant portion of our revenues from our major customers, the loss of one or more of which could have a materially adverse effect on our business.

We strive to maintain a diverse customer base;

however, a significant portion of our operating revenue is generated from a number of major customers, the loss of one or more of which could have a materially adverse effect on our business.

A significant portion of our operating revenue is generated from a number of major customers, the loss of one or more of which could have a materially adverse effect on our business.

Refer to Part I, Item 1, "Business" for information regarding our customer concentrations.

Aside from our dedicated operations, we generally do not have long-term contractual relationships or rate agreements or minimum volume guarantees with our customers.

Furthermore, certain of the long-term contracts in our dedicated operations are subject to cancellation.

There is no assurance any of our customers, including our dedicated customers, will continue to utilize our services, renew our existing contracts, or continue at the same volume levels.

Despite the existence of

There is no assurance any of our customers will continue to utilize our services, renew our existing contracts, continue at the same volume levels, or not seek to modify terms of existing contracts.

A reduction in or termination of our services by one or more of our major customers could have a materially adverse effect on our business, financial condition, and results of operations.

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contractual arrangements, certain of our customers may nonetheless engage in competitive bidding processes that could negatively impact our contractual relationship.

In addition, certain of our major customers may increasingly use their own truckload and delivery fleets, which would reduce our freight volumes.

A reduction in or termination of our services by one or more of our major customers, including our dedicated customers, could have a materially adverse effect on our business, financial condition, and results of operations.

Economic conditions and capital markets may adversely affect our customers and their ability to remain solvent.

Retail and discount retail customers account for a substantial portion of our freight.

Accordingly, our results may be more susceptible to trends in unemployment and retail sales than carriers that do not have this concentration.

While we review and monitor the financial condition of our key customers on an ongoing basis to determine whether to provide services on credit, our customers' financial difficulties could nevertheless negatively impact our results of operations and financial condition, especially if these customers were to delay or default on payments to us.

In addition, our customers' financial difficulties could negatively impact our results of operations and financial condition, especially if these customers were to delay or default on payments to us.

For our multi-year and dedicated contracts, the rates we charge may not remain advantageous.

A reduction in or termination of our services by one or more of our major customers could have a materially adverse effect on our business and results of operations.

Difficulty in obtaining goods and services from our vendors and suppliers could adversely affect our business.

We are dependent upon our vendors and suppliers for certain products and materials.

We believe that we have positive vendor and supplier relationships and are generally able to obtain favorable pricing and other terms from such parties.

If we fail to maintain amenable relationships with our vendors and suppliers, or if our vendors and suppliers are unable to provide the products and materials we need or undergo financial hardship, we could experience difficulty in obtaining needed goods and services because of production interruptions, limited material availability, or other reasons.

Subsequently, our business and operations could be adversely affected.

We depend on third-party capacity providers, and service instability from these transportation providers could increase our operating costs, reduce our ability to offer intermodal and brokerage services, and limit growth in our logistics operations, which could adversely affect our revenue, results of operations, and customer relationships.

We depend on third-party capacity providers, and service instability from these transportation providers could increase our operating costs and reduce our ability to offer intermodal and brokerage services, which could adversely affect our revenue, results of operations, and customer relationships.

Our intermodal operations use railroads and some third-party drayage carriers to transport freight for our customers, and intermodal dependence on railroads could increase as intermodal services expand.

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Our ability to provide intermodal services in certain traffic lanes would be reduced or eliminated if the railroads' services became unstable.

Railroads with which we have, or in the future may have, contractual relationships could reduce their services in the future, which could increase the cost of the rail-based services we provide and could reduce the reliability, timeliness, efficiency, and overall attractiveness of our rail-based intermodal services.

Furthermore, railroads increase shipping rates as market conditions permit.

Price increases could result in higher costs to us, which we may be unable to pass on to our customers and could result in the reduction or elimination of our ability to offer intermodal services.

Railroads could reduce their services in the future, which could increase the cost of the rail-based services we provide and could reduce the reliability, timeliness, efficiency, and overall attractiveness of our rail-based intermodal services.

Furthermore, price increases could result in higher costs to us, which we may be unable to pass on to our customers and could result in the reduction or elimination of our ability to offer intermodal services.

In addition, we may not be able to negotiate additional contracts with railroads to expand our capacity, add additional routes, obtain multiple providers, or obtain railroad services at current cost levels, any of which could limit our ability to provide this service.

Our intermodal operations could also be adversely affected by a work stoppage at one or more railroads or by adverse weather conditions or other factors that hinder the railroads' ability to provide reliable service.

Our logistics operations are dependent upon the services of third-party capacity providers, including other truckload capacity providers.

These third-party providers may seek other freight opportunities and may require increased compensation in times of improved freight demand or tight truckload capacity.

Our third-party capacity providers may also be affected by certain factors to which our driving associates and independent contractors are subject, including, but not limited to, changing workforce demographics, alternative employment opportunities, varying freight market conditions, trucking industry regulations, and limited availability of equipment financing.

Most of our third-party capacity provider transportation services contracts are cancelable on 30 days' notice or less.

If we are unable to secure the services of these third-parties, or if we become subject to increases in the prices we must pay to secure such services, and we are not able to obtain corresponding customer rate increases, our business, financial condition, and results of operations may be materially adversely affected.

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If we are unable to recruit, develop, and retain our key employees, our business, financial condition, and results of operations could be adversely affected.

We are highly dependent upon the services of certain key employees, including, but not limited to, our team of executive officers and terminal leaders.

We believe our team of executive officers possesses valuable knowledge about the trucking industry and their knowledge of and relationships with our key customers and vendors would be difficult to replicate.

We currently do not have employment agreements with our key employees or executive officers, and the loss of any of their services or inadequate succession planning could negatively impact our operations and future profitability.

Additionally, because of our regional operating strategy, we must continue to recruit, develop, and retain skilled and experienced terminal leaders.

Failure to recruit, develop, and retain a core group of terminal leaders could have an adverse effect on our results of operations.

Increases in driving associate compensation or difficulties attracting and retaining qualified driving associates could have a materially adverse effect on our profitability and the ability to maintain or grow our fleet.

With respect to our trucking services, difficulty in attracting and retaining sufficient numbers of qualified driving associates, which includes the engagement of independent contractors, in our truckload operations, and third-party capacity providers in our logistics operations, could have a materially adverse effect on our growth and profitability.

The truckload transportation industry is subject to a shortage of qualified driving associates.

Such shortage is exacerbated during periods of economic expansion, in which alternative employment opportunities, including in the construction and manufacturing industries, which may offer better compensation and/or more time at home , are more plentiful and freight demand increases, or during periods of economic downturns, in which unemployment benefits might be extended and financing is limited for independent contractors who seek to purchase equipment or for students who seek financial aid for driving school.

Regulatory requirements, including those related to safety ratings, ELDs, hours-of-service changes, and drug and alcohol testing, could further reduce the number of eligible driving associates or force us to increase driving associate compensation to attract and retain driving associates.

We believe our employee screening process, which includes extensive background checks and hair follicle drug testing, is more rigorous than generally employed in our industry and has decreased the pool of qualified applicants available to us.

We have seen evidence that stricter hours-of-service regulations adopted by the DOT in the past have tightened, and to the extent new regulations are enacted, may continue to tighten the market for eligible driving associates.

The lack of adequate tractor parking along some US highways and congestion caused by inadequate highway funding may make it more difficult for drivers to comply with hours-of-service regulations and cause added stress for drivers, further reducing the pool of eligible drivers.

We believe the required implementation of ELDs has tightened and may further tighten the market.

We believe the shortage of qualified driving associates and intense competition for driving associates from other trucking companies will create difficulties in maintaining or increasing the number of driving associates and may restrain our ability to engage a sufficient number of driving associates and independent contractors.

Our inability to do so may negatively affect our operations.

Further, our driving associates compensation and independent contractor expenses are subject to market conditions.

We have increased these rates in recent years and we may find it necessary to increase driving associate and independent contractor contracted rates in future periods.

Our independent contractors and third-party capacity providers are responsible for paying for their own equipment, fuel, and other operating costs, and significant increases in these costs could cause them to seek higher contracted rates from us or seek other opportunities within or outside the trucking industry.

In addition, we and many other carriers suffer from a high turnover rate of driving associates and independent contractors.

This high turnover rate requires us to spend significant resources recruiting a substantial number of driving associates and independent contractors in order to operate existing revenue equipment and maintain our current level of capacity and subjects us to a higher degree of risk with respect to driving associate and independent contractor shortages than our competitors.

We also employ driving associate hiring standards which we believe are more rigorous than the hiring standards generally employed in our industry and could further reduce the pool of available drivers from which we would hire.

If we are unable to continue to attract driving associates, independent contractors, and third-party capacity providers, we could be forced to, among other things, limit our growth, decrease the number of our tractors in service, adjust our driving associate compensation package or independent contractor contracted rates, or pay higher rates to third-party capacity providers, which could adversely affect our profitability and results of operations if not offset by a corresponding increase in customer rates.

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Our contractual agreements with independent contractors expose us to risks that we do not face with our company driving associates.

Our financing subsidiaries offer financing to some of the independent contractors we contract with to purchase or lease tractors from us.

If these independent contractors default or experience a lease termination in conjunction with these agreements and we cannot replace them, we may incur losses on amounts owed to us.

Also, if liquidity constraints or other restrictions prevent us from providing financing to the independent contractors we contract with in the future, then we could experience a shortage of independent contractors.

Pursuant to our fuel reimbursement program with independent contractors, when fuel prices increase above a certain level, we share the cost with the independent contractors we contract with in order to mute the impact that increasing fuel prices may have on their business operations.

A significant increase or rapid fluctuation in fuel prices could cause our reimbursement costs under this program to be higher than the revenue we receive from our customers under our fuel surcharge programs.

Independent contractors are third-party service providers, as compared to company driving associates who are employed by us.

As independent business owners, the independent contractors we contract with may make business or personal decisions that conflict with our best interests.

For example, if a load is unprofitable, route distance is too far from home, personal scheduling conflicts arise, or for other reasons, independent contractors may deny loads of freight from time-to-time.

In these circumstances, we must be able to timely deliver the freight in order to maintain relationships with customers.

We are dependent on management information and communications systems and other information technology assets (including the data contained therein), and a significant systems disruption or failure in the foregoing, including those caused by cybersecurity breaches, could adversely affect our business.

Our business depends on the efficient, stable, and uninterrupted operation of our management information and communications systems and other information technology assets (including the data contained therein).

Some of our key software, hardware systems, and infrastructure were developed internally or by adapting purchased software applications and hardware to suit our needs.

Our management information and communication systems are used in various aspects of our business, including but not limited to load planning and receiving, dispatch of driving associates and third-party capacity providers, customer billing, producing productivity, financial and other reports, and other general functions and purposes.

If any of our critical information or communications systems fail or become unavailable, we may have to perform certain functions manually, which could temporarily affect the efficiency and effectiveness of our operations.

Our operations and those of our technology and communications service providers are vulnerable to interruption by natural disaster, fire, power loss, telecommunications failure, cyber-attacks, terrorist attacks, internet failures, computer viruses, malware, hacking, and other events beyond our control.

More sophisticated and frequent cyber-attacks in recent years have also increased security risks associated with information technology systems.

We also maintain information security policies to protect our systems, networks and other information technology assets (and the data contained therein) from cybersecurity breaches and threats, such as hackers, malware and viruses;

however, such policies cannot ensure the protection of our systems, networks and other information technology assets (and the data contained therein).

We currently maintain our primary computer hardware systems at Knight's and Swift's headquarters, both located in Phoenix, Arizona, along with computer equipment at each of our terminals.

In an attempt to reduce the risk of disruption to our business operations should a disaster occur, we have redundant computer systems and networks and the capability to deploy these back-up systems from an off-site alternate location.

We believe that any such disruption would be minimal, moderate, or temporary.

However, we cannot predict the likelihood or extent to which such alternate location or our information and communication systems would be affected.

Our business and operations could be adversely affected in the event of a system failure, disruption, or security breach that causes a delay, interruption, or impairment of our services and operations.

We receive and transmit confidential data with and among our customers, driving associates, vendors, employees, and service providers in the normal course of business.

Despite our implementation of secure transmission techniques, internal data security measures, and monitoring tools, our information and communication systems are vulnerable to disruption of communications with our customers, driving associates, vendors, employees, and service providers.

Our systems are also vulnerable to unauthorized access and viewing, misappropriation, altering, or deleting of information, including customer, driving associate, vendor, employee, and service provider information and our proprietary business information.

A security breach could damage our business operations and reputation and could cause us to incur costs associated with repairing our systems, increased security, customer notifications, lost operating revenue, litigation, regulatory action, and reputational damage.

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Seasonality and the impact of weather and other catastrophic events affect our operations and profitability.

Our tractor productivity decreases during the winter season because inclement weather impedes operations, and some shippers reduce their shipments after the winter holiday season.

Revenue can be affected by bad weather and holidays, since revenue is directly related to available working days of shippers.

At the same time, operating expenses increase because harsh weather creates higher accident frequency, increased claims, and more equipment repairs.

Fuel efficiency declines because of increased engine idling.

In addition, some of our customers demand additional capacity during the fourth quarter, which could limit our ability to take advantage of more attractive spot market rates that generally exist during such periods.

Further, despite our efforts to meet such demands, we may fail to do so, which may result in lost future business opportunities with such customers, which could have an adverse effect on our operations.

We may also suffer from weather-related or other unforeseen events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes, and explosions.

These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, destroy our assets, or adversely affect the business or financial condition of our customers, any of which could have a materially adverse effect on our results of operations or make our results of operations more volatile.

Insurance and claims expenses could significantly reduce our earnings.

Our future insurance and claims expense might exceed historical levels, which could reduce our earnings.

We self-insure, or insure through our captive insurance companies, a significant portion of our claims exposure resulting from workers' compensation, auto liability, general liability, cargo and property damage claims, as well as Knight's employee health insurance (and effective January 1, 2020, Swift's health insurance), which could increase the volatility of, and decrease the amount of, our earnings, and could have a materially adverse effect on our results of operations.

We self-insure, or insure through our captive insurance companies, a significant portion of our claims exposure.

For a detailed discussion of our self-insurance programs, including self-insurance retention limits, please refer to Note 13 to the consolidated financial statements, included in Part II, Item 8 of this Annual Report.

Higher self-insured retention levels may increase the impact of auto liability occurrences on our results of operations.

We are also responsible for our legal expenses relating to such claims.

We reserve for anticipated losses and expenses and periodically evaluate and adjust our claims reserves to reflect our experience.

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Accordingly, ultimate results may differ materially from our estimates, which could result in losses over our reserved amounts and could materially adversely affect our financial condition and results of operations.

We maintain insurance with licensed insurance carriers above the amounts in which we self-insure.

Although we believe our aggregate insurance limits should be sufficient to cover reasonably expected claims, it is possible that the amount of one or more claims could exceed our aggregate coverage limits.

If any claim were to exceed our coverage, we would bear the excess, in addition to our other self-insured amounts.

Insurance carriers have raised premiums for many businesses, including transportation companies.

As a result, our insurance and claims expense could increase, or we could raise our self-insured retention or decrease the amount of our excess insurance coverage when our policies are renewed or replaced.

Our results of operations and financial condition could be materially and adversely affected if (1) cost per claim or the number of claims significantly exceeds our coverage limits or retention amounts;

(2) we are unable to obtain insurance coverage in amounts we deem sufficient;

(3) we experience a significant increase in premiums;

(4) we experience a claim in excess of our coverage limits;

(5) our insurance carriers fail to pay on our insurance claims;

or (6) we experience a claim for which coverage is not provided.

Healthcare legislation and inflationary cost increases could also negatively impact financial results by increasing annual employee healthcare costs.

We cannot presently determine the extent of the impact such increased healthcare costs will have on our financial performance.

In addition, rising healthcare costs could force us to make changes to existing benefit programs, which could negatively impact our ability to attract and retain employees.

Furthermore, insurance carriers have raised premiums for many businesses, including transportation companies.

In addition, rising healthcare costs could negatively impact financial results or force us to make changes to existing benefit programs, which could negatively impact our ability to attract and retain employees.

Insuring risk through our captive insurance companies could adversely impact our operations.

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To comply with certain state insurance regulatory requirements, cash and cash equivalents must be paid to Red Rock and Mohave as capital investments and insurance premiums, to be restricted as collateral for anticipated losses.

The restricted cash is used for payment of insured claims.

Our captive insurance companies are regulated by state authorities.

State regulations generally provide protection to policy holders, rather than stockholders.

These regulations may increase our costs of regulatory compliance, limit our ability to change premiums, restrict our ability to access cash held in our captive insurance companies, and otherwise impede our ability to take actions we deem advisable.

In the future, we may continue to insure our automobile liability risk through our captive insurance subsidiaries, which will cause increases in the required amount of our restricted cash or other collateral, such as letters of credit.

Significant increases in the amount of collateral required by third-party insurance carriers and regulators would reduce our liquidity.

Compliance Risk

We operate in a highly regulated industry, and changes in existing regulations or violat i ons of existing or future regulations could have a materially adverse effect on our operations and profitability.

We have authority to operate in the US, as granted by the DOT, Mexico (as granted by the Secretaría de Comunicaciones y Transportes), and various Canadian provinces (as granted by the Ministries of Transportation and Communication in such provinces).

In the US, we are also regulated by the EPA, US Department of Homeland Security, and other agencies in states in which we operate.

Our company driving associates, independent contractors, and third-party capacity providers must also comply with the applicable safety and fitness regulations of the DOT, including those relating to drug and alcohol testing, driver safety performance, and hours-of-service.

Matters such as weight, equipment dimensions, exhaust emissions, and fuel efficiency are also subject to government regulations.

We may also become subject to new or more restrictive regulations relating to fuel efficiency, exhaust emissions, hours-of-service, drug and alcohol testing, ergonomics, on-board reporting of operations, collective bargaining, security at ports, speed limiters, driver training, and other matters affecting safety or operating methods.

Future laws and regulations may be more stringent, require changes in our operating practices, influence the demand for transportation services, or require us to incur significant additional costs.

Higher costs incurred by us, or by our suppliers who pass the costs onto us through higher supplies and materials pricing, could adversely affect our results of operations.

In addition, the Trump administration has indicated a desire to reduce regulatory burdens that constrain growth and productivity, and also to introduce legislation such as infrastructure spending, that could improve growth and productivity.

Changes in regulations, such as those related to trailer size and gross vehicle weight limits, hours-of-service, mandating ELDs, and drug and alcohol testing, could increase capacity in the industry or improve the position of certain competitors, either of which could negatively impact pricing and volumes, or require additional investments by us.

The short and long term impacts of changes in legislation or regulations are difficult to predict and could materially and adversely affect our operations.

If we are unable to recruit, develop, and retain our key employees, our business, financial condition, and results of operations could be adversely affected.

We are highly dependent upon the services of certain key employees and we believe their valuable knowledge about the trucking industry and relationships with our key customers and vendors would be difficult to replicate.

We currently do not have employment agreements with our key employees, and the loss of any of their services or inadequate succession planning could negatively impact our operations and future profitability.

Difficulty in attracting and retaining sufficient numbers of qualified driving associates, independent contractors, and third-party capacity providers, could have a materially adverse effect on our growth and profitability.

The truckload transportation industry is subject to a shortage of qualified driving associates.

Such shortage is exacerbated during periods of economic expansion, in which there may be alternative employment opportunities, or during periods of economic downturns, in which unemployment benefits might be extended and financing is limited for independent contractors who seek to purchase equipment or for students who seek financial aid for driving school.

Furthermore, capacity at driving schools may be limited by COVID-19-related social distancing requirements.

Regulatory requirements could further reduce the number of eligible driving associates.

Our inability to engage a sufficient number of driving associates and independent contractors may negatively affect our operations.

Further, our driving associate compensation and independent contractor expenses are subject to market conditions and we may find it necessary to increase driving associate and independent contractor contracted rates in future periods.

In addition, we suffer from a high turnover rate of driving associates and independent contractors.

This high turnover rate requires us to spend significant resources on recruiting and retention.

Our arrangements with independent contractors expose us to risks that we do not face with our company driving associates.

Our financing subsidiaries offer financing to some of the independent contractors we contract with to purchase or lease tractors from us.

If these independent contractors default or experience a lease termination in conjunction with these agreements and we cannot replace them, we may incur losses on amounts owed to us.

Our lease contracts with independent contractors are governed by federal leasing regulations, which impose specific requirements on us and the independent contractors.

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We could be subjected to similar lawsuits and decisions in the future, which if determined adversely to us, could have an adverse effect on our financial condition.

In December 2016, the FMCSA established new minimum training standards for certain individuals applying for (or upgrading) a Class A or Class B commercial driver's license, or obtaining a hazardous materials, passenger, or school bus endorsement on their commercial driver's license for the first time.

"Industry Regulation" in Part I, Item 1 of this Annual Report, discusses in detail this standard and several other proposed, pending, suspended, and final regulations that could materially impact our business and operations.

The CSA program adopted by the FMCSA could adversely affect our profitability and operations, our ability to maintain or grow our fleet, and our customer relationships.

Under CSA, fleets are evaluated and ranked against their peers based on certain safety-related standards.

As a result, our fleet could be ranked poorly as compared to our peer carriers.

We recruit and retain first-time driving associates to be part of our fleet, and these driving associates may have a higher likelihood of creating adverse safety events under CSA.

The occurrence of future deficiencies could affect driving associate recruitment by causing high-quality driving associates to seek employment with other carriers or limit the pool of available driving associates.

This could also cause our customers to direct their business away from us and to carriers with higher fleet safety rankings.

These factors would adversely affect our business, financial condition and results of operations.

Additionally, competition for driving associates with favorable safety backgrounds may increase, which could necessitate increases in driving

Our management information and communication systems are used in various aspects of our business.

If any of our critical information or communications systems fail or become unavailable, it could temporarily affect the efficiency and effectiveness of our operations.

Our operations and those of our providers are vulnerable to interruption by

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associate-related compensation costs.

Further, we may incur greater than expected expenses in our attempts to improve unfavorable scores.

"Industry Regulation" in Part I, Item 1 of this Annual Report, provides discussion of the FAST Act and CSA reform.

Receipt of an unfavorable DOT safety rating could have a materially adverse effect on our operations and profitability.

The FMCSA has proposed regulations that would modify the existing rating system and the safety labels assigned to motor carriers evaluated by the DOT.

If similar regulations were enacted and we were to receive an unfit or other negative safety rating, our business would be materially adversely affected in the same manner as if we received a conditional or unsatisfactory safety rating under the current regulations.

In addition, poor safety performance could lead to increased risk of liability, increased insurance, maintenance and equipment costs, and potential loss of customers, which could materially adversely affect our business, financial condition, and results of operations.

"Industry Regulation" in Part I, Item 1 of this Annual Report, provides discussion of the DOT and Safety fitness determination.

natural disaster, fire, power loss, telecommunications failure, cyber-attacks, terrorist attacks, internet failures, and other events beyond our control.

We receive and transmit confidential data in the normal course of business.

Despite our implementation of safeguards, our information and communication systems are vulnerable to disruption, unauthorized access and viewing, misappropriation, altering, or deleting of information.

Seasonality and the impact of weather and other catastrophic events could have a materially adverse effect on our results of operations and profitability or make our results of operations and profitability more volatile.

"Seasonality" in Part I, Item 1 of this Annual Report, discusses in detail how seasonality and weather could impact our operations.

Our business and results of operations have been and will be, and our financial condition may be, impacted by the outbreak of COVID-19 or other similar outbreaks, and such impact could be materially adverse, during the pandemic or after the pandemic subsides.

The global spread of COVID-19 has created, and any other outbreaks of similar contagious diseases or other adverse public health developments could create, significant volatility, uncertainty and economic disruption.

We have experienced an increase in absences among our driver and non-driver personnel due to the outbreak of COVID-19.

Further, our operations, particularly in areas of increased COVID-19 infections could be disrupted.

Negative financial results, operational disruptions, driver and non-driver absences, uncertainties in the market, and a tightening of credit markets, caused by COVID-19, other similar outbreaks, or a recession, could have a material adverse effect on our liquidity, reduce credit options available to us, and adversely impact our ability to effectively meet our short- and long-term obligations.

The COVID-19 outbreak has caused uncertainty in the economy.

Risks related to an economic slowdown or recession are described in our risk factor titled "Our business is subject to economic, credit, business, and regulatory factors affecting the truckload industry that are largely beyond our control, any of which could have a materially adverse effect on our results of operations."

Developments related to COVID-19 have been unpredictable and the extent to which further developments could impact our operations, financial condition, liquidity, results of operations, and cash flows is highly uncertain.

Such developments may include the duration of the virus, the distribution and availability of vaccines, the severity of the disease, and the actions that may be taken by various governmental authorities and other third parties in response to the pandemic.

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Compliance Risk

We, our drivers, and our equipment are regulated by the DOT, the EPA, the DHS, and other state and federal agencies in the states, provinces, and countries in which we operate.

Future laws and regulations or changes to existing laws and regulations may be more stringent, require changes in our operating practices, influence the demand for transportation services, or require us to incur significant additional costs, which could materially adversely affect our business, financial condition, and results of operations.

"Industry Regulation" in Part I, Item 1 of this Annual Report, discusses in detail industry regulations that could materially impact our business, financial condition, and operations.

Receipt of an unfavorable DOT safety rating or an unfavorable ranking under the CSA program could have a material adverse effect on our profitability and operations.

If we received a conditional or unsatisfactory DOT safety rating or an unfavorable ranking under the CSA program, it could lead to increased risk of liability, increased insurance, maintenance and equipment costs, and potential loss of customers, which could materially adversely affect our business, financial condition, and results of operations.

"Industry Regulation" in Part I, Item 1 of this Annual Report, provides discussion of the DOT safety rating system and the CSA program.

Compliance with various environmental laws and regulations to which our operations are subject may increase our costs of operations, and non-compliance with such laws and regulations could result in substantial fines or penalties.

In addition to direct regulation by the DOT and related agencies, we are subject to various federal, state, and local environmental laws and regulations dealing with the transportation, storage, discharge, presence, use, disposal, and handling of hazardous materials, wastewater, storm water, waste oil, and fuel storage tanks.

We are also subject to various environmental laws and regulations involving air emissions from our equipment and facilities, and discharge and retention of storm water.

Our terminals often are located in industrial areas where groundwater or other forms of environmental contamination may have occurred or could occur.

Our operations involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others.

Certain of our facilities have waste oil or fuel storage tanks and fueling islands.

A small percentage of our freight consists of low-grade hazardous substances, which subjects us to a wide array of regulations.

We are subject to various environmental laws and regulations.

We have instituted programs to monitor and control environmental risks and promote compliance with applicable environmental laws and regulations;

however, if (1) we are involved in a spill or other accident involving hazardous substances;

however, in the event of any of the following, we could be subject to clean-up costs and liabilities, including substantial fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on our business and results of operations:

• we are involved in a spill or other accident involving hazardous substances;

• there are releases of hazardous substances we transport;

• soil or groundwater contamination is found at our facilities or results from our operations;

or (4) we are found to be in violation of or fail to comply with applicable environmental laws or regulations, then we could be subject to clean-up costs and liabilities, including substantial fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on our business and results of operations.

• we are found to be in violation of or fail to comply with applicable environmental laws or regulations, then we fail to comply with such laws and regulations.

Certain of our terminals are located on or near environmental Superfund sites designated by the EPA and/or state environmental authorities.

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Nevertheless, we could be deemed responsible for clean-up costs.

In addition, tractors and trailers used in our truckload operations have been and are affected by federal, state, and local statutory and regulatory requirements related to air emissions and fuel efficiency, including rules established in 2011 and 2016 by the NHTSA and the EPA and certain states for stricter fuel efficiency standards for heavy trucks, described in detail in "Environmental Regulation" in Part I, Item 1 of this Annual Report.

In order to reduce exhaust emissions and traffic congestion, some states and municipalities have restricted the locations and amount of time where diesel-powered tractors, such as ours, may idle or travel.

These and other similar restrictions could cause us to alter our driving associates’ behavior and routes, purchase additional auxiliary or other on-board power units to replace or minimize engine power and idling, or experience decreases in productivity.

Our tractors and trailers could also be adversely affected by related or similar legislative or regulatory actions in the future.

In addition, tractors and trailers used in our truckload operations are affected by laws and regulations related to air emissions and fuel efficiency.

"Environmental Regulation" in Part I, Item 1 of this Annual Report, provides a discussion of the environmental laws and regulations applicable to our business and operations.

Developments in labor and employment law and any unionizing efforts by employees could have a materially adverse effect on our results of operations.

Although our only collective bargaining agreement exists at our Mexican subsidiary, Trans-Mex, we always face the risk that our employees will try to unionize.

Congress, federal agencies, or one or more states could adopt legislation or regulations significantly affecting our business and our relationship with our employees, such as the previously proposed federal legislation referred to as the "Employee Free Choice Act" that would substantially liberalize the procedures for union organizing.

Any attempt to organize by our employees could result in increased legal and other

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associated costs.

Additionally, given the NLRB's "speedy election" rule, it would be difficult to timely and effectively address any unionizing efforts.

If we entered into a collective bargaining agreement with our domestic employees, the terms could materially adversely affect our costs, efficiency, and ability to generate acceptable returns on the affected operations.

If the independent contractors we contract with were ever re-classified as employees, the magnitude of this risk would increase.

In addition, the Department of Labor ("DOL") issued a final rule in 2016 raising the minimum salary basis for executive, administrative, and professional exemptions from overtime payment.

The rule increases the minimum salary from $23,660 to $47,476.

Additionally, up to a 10% of non-discretionary bonus, commission, and other incentive payments can be counted towards the minimum salary requirement.

The rule was scheduled to go into effect on December 1, 2016.

However, the rule was temporarily enjoined from going into effect in November 2016, and later invalidated in August 2017, after several states and business groups filed separate lawsuits against the DOL challenging the rule.

However, any similar future rule that:

(1) impacts the way we classify certain positions, (2) increases our payment of overtime wages, or (3) increases the salaries we pay to currently exempt employees to maintain their exempt status, may have an adverse effect on our business, financial condition, and results of operations.

In May 2015, the US Supreme Court refused to grant certiorari to appellees in the US Court of Appeals for the Ninth Circuit case, Dilts et al.

Penske Logistics, LLC, et al.

Consequently, the Appeals Court decision stood, holding that California state wage and hour laws are not preempted by federal law.

However, in December 2018, the FMCSA granted a petition filed by the American Trucking Associations, and in doing so determined that federal law does preempt California’s wage and hour laws, and interstate truck drivers are not subject to such laws.

The FMCSA’s decision has been appealed by labor groups, and multiple lawsuits have been filed in federal courts seeking to overturn the decision, and thus it’s uncertain whether it will stand.

Other wage and hour laws with the states and localities, including laws related to employee meal breaks and rest periods, may also vary significantly from federal law.

As a result, the trucking industry has been confronted with a patchwork of state and local laws, and we have been and are currently subject to certain class-action lawsuits for violating such laws.

Further, driver piece rate compensation, which is an industry standard, has been attacked as non-compliant with state minimum wage laws.

Both of these issues are adversely impacting us and the industry as a whole, with respect to the practical application of the laws, thereby resulting in additional cost.

In our individual capacity, as well as participating with industry trade organizations, we support and actively pursue legislative relief through Congress.

In the past, federal legislation has been proposed that would clarify the preemptive scope of federal transportation law and regulations, as originally contemplated by Congress.

We believe enacting such legislation would eliminate much of the current wage and hour confusion along with lessening the burden on interstate commerce.

However, the passage of such proposed federal legislation is uncertain.

Existing state and local laws, as well as new laws adopted in the future, which are not preempted by federal law, may result in increased labor costs, driving associate turnover, reduced operational efficiencies, and amplified legal exposure.

If our independent contractors are deemed by regulators or judicial process to be employees, our business, financial condition, and results of operations could be adversely affected.

Tax and other regulatory authorities, as well as independent contractors themselves, have increasingly asserted that independent contractors in the trucking industry are employees rather than independent contractors for a variety of purposes, including income tax withholding, workers' compensation, wage and hour compensation, unemployment, and other issues.

Federal legislators have introduced legislation in the past to make it easier for tax and other authorities to reclassify independent contractors as employees, including legislation to increase the recordkeeping requirements for those that engage independent contractors and to increase the penalties of companies who misclassify their employees as independent contractors and are found to have violated employees' overtime and/or wage requirements.

Additionally, federal legislators have sought to (1) abolish the current safe harbor (which allows taxpayers meeting certain criteria to treat individuals as independent contractors if they are following a long-standing, recognized practice), (2) extend the FLSA to independent contractors, and (3) impose notice requirements based upon employment or independent contractor status and fines for failure to comply.

Some states have adopted initiatives to increase their revenues from items such as unemployment, workers' compensation, and income taxes, and a reclassification of independent contractors as employees would help states with these initiatives.

Additionally, courts in certain states have issued recent decisions that could result in a greater likelihood that independent contractors would be judicially classified as employees in such states.

In September 2019, California enacted a law that made it more difficult for workers to be classified as independent contractors (as opposed to employees) .

"Industry Regulation" in Part I, Item 1 of this Annual Report, provides discussion of this new California law.

Taxing and other regulatory authorities and courts also apply a variety of standards in their determination of independent contractor status.

In addition, carriers such as us that operate or have operated lease-purchase programs have been more susceptible to lawsuits seeking

"Industry Regulation" in Part I, Item 1 of this Annual Report, provides discussion of labor and employment laws applicable to our business and operations.

If our independent contractors are deemed by regulators or the judicial process to be employees, our business, financial condition, and results of operations could be adversely affected.

Carriers such

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to reclassify independent contractors that have engaged in such programs.

as us that operate or have operated lease-purchase programs have been more susceptible to lawsuits seeking to reclassify independent contractors that have engaged in such programs.

If the independent contractors we engage were determined to be our employees, we would incur additional exposure under federal and state tax, workers' compensation, unemployment benefits, labor, employment, insurance, discrimination, and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings.

Furthermore, if independent contractors were deemed employees, then certain of our third-party revenue sources, including shop and insurance margins, would be eliminated.

We are party to class actions from time-to-time alleging violations of the FLSA and other state and federal laws and seeking to reclassify independent contractors as employees.

Adverse decisions on these or similar matters could adversely affect our results of operations and profitability, particularly if a decision results in exposure that exceeds our related accrual.

"Industry Regulation" in Part I, Item 1 of this Annual Report, provides discussion of legislation regarding independent contractors.

Litigation may adversely affect our business, financial condition, and results of operations.

Our business is subject to the risk of litigation by employees, independent contractors, customers, vendors, government agencies, stockholders, and other parties through private actions, class actions, administrative proceedings, regulatory actions, and other processes.

Our business is subject to the risk of litigation.

Recently, trucking companies, including us, have been subject to lawsuits, including class action lawsuits, alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal breaks, rest periods, overtime eligibility, and failure to pay for all hours worked.

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These lawsuits have resulted, and may result in the future, in the payment of substantial settlements or damages and increases of our insurance costs.

Our captive insurance companies are subject to substantial government regulation.

Our captive insurance companies are regulated by state authorities.

State regulations generally provide protection to policy holders, rather than stockholders, and generally involve:

approval of premium rates for insurance;

standards of solvency;

minimum amounts of statutory capital surplus that must be maintained;

limitations on types and amounts of investments;

regulation of dividend payments and other transactions between affiliates;

regulation of reinsurance;

regulation of underwriting and marketing practices;

approval of policy forms;

methods of accounting;

filing of annual and other reports with respect to financial condition and other matters.

Uncertainties in the interpretation and application of the Tax Cuts and Jobs Act could materially affect our tax obligations and effective tax rate.

On December 22, 2017, the US government enacted significant changes to its tax law following the passage of the Tax Cuts and Jobs Act.

The new law requires complex computations not previously required by US tax law.

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the application of accounting guidance for such items is currently uncertain.

Further, compliance with the new law and the accounting for such provisions requires preparation and analysis of information not previously required or regularly produced.

In addition, the US Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how we will apply the law and impact our results of operations in future periods.

Accordingly, while we have provided a provisional estimate on the effect of the new law in our consolidated financial statements, further regulatory or GAAP accounting guidance for the law, our further analysis on the application of the law, and refinement of our initial estimates and calculations could materially change our current provisional estimates, which could in turn materially affect our tax obligations and effective tax rate.

There are also likely to be significant future impacts that these tax reforms will have on our future financial results and our business strategies.

In addition, there is a risk that states or foreign jurisdictions may amend their tax laws in response to these tax reforms, which could have a material impact on our future results.

Changes to trade regulation, quotas, duties or tariffs, caused by the changing US and geopolitical environments or otherwise, may increase our costs and adversely affect our business.

President Trump has expressed antipathy towards certain existing international trade agreements and made comments suggesting that he supports significantly increasing tariffs on goods imported into the US.

In December 2019, preliminary agreement on a new trade deal with Canada and Mexico, the USMCA, was reached, and while the timing of approving the USMCA is still uncertain, the USMCA could impact the amount, movement, and patterns of freight transported by the Company.

Further, recent activity by the Trump administration has led to the imposition of tariffs on certain imported steel and aluminum.

The implementation of these tariffs, as well as the imposition of additional tariffs or quotas or changes to certain trade agreements, could, among other things, increase the costs of the materials used by our suppliers to produce new revenue equipment or increase the price of fuel.

The approach of President Biden’s administration to tariffs and other trade regulations is uncertain.

The imposition of additional tariffs or quotas or changes to certain trade agreements, could, among other things, increase the costs of the materials used by our suppliers to produce new revenue equipment or increase the price of fuel.

Such cost increases for our revenue equipment suppliers would likely be passed on to us, and to the extent fuel prices increase, we may not be able to fully recover such increases through rate increases or our fuel surcharge program, either of which could have an adverse effect on our business.

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Financial Risk

We have significant ongoing capital requirements that could affect our profitability if our capital investments do not match customer demand for invested resources, we are unable to generate sufficient cash from operations, or we are unable to obtain financing on favorable terms.

The truckload industry and our truckload operations are capital intensive, and our policy of operating newer equipment requires us to expend significant amounts on capital annually.

The amount and timing of such capital expenditures depend on various factors, including anticipated freight demand and the price and availability of assets.

Our truckload operations are capital intensive, and our policy of operating newer equipment requires us to expend significant amounts on capital annually.

If anticipated demand differs materially from actual usage, our capital intensive truckload operations may have too many or too few assets.

Moreover, resource requirements vary based on customer demand, which may be subject to seasonal or general economic conditions.

During periods of decreased customer demand, our asset utilization may suffer, and we may be forced to sell equipment on the open market or turn in equipment under certain equipment leases in order to right-size our fleet.

This could cause us to incur losses on such sales or require payments in connection with such turn-ins, particularly during times of a softer used equipment market, either of which could have a materially adverse effect on our profitability.

Our ability to select profitable freight and adapt to changes in customer transportation requirements is important to efficiently deploy resources and make capital investments in tractors and trailers (with respect to our truckload operations) or obtain qualified third-party capacity at a reasonable price (with respect to our logistics operations).

Our capital expenditures are funded primarily with cash flows from operations and borrowings under the Revolver.

If these sources were insufficient to meet our capital expenditure needs, we would need to seek alternative sources of capital, including additional borrowing or equity capital.

In the event that we are unable to generate sufficient cash from operations, maintain compliance with financial and other covenants in our financing agreements, or obtain equity capital or financing on favorable terms in the future, we may have to limit our fleet size, enter into less favorable financing, or operate our revenue equipment for longer periods, any of which could have a materially adverse effect on our operations and profitability.

Credit markets may weaken at some point in the future, which would make it difficult for us to access our current sources of credit and difficult for our lenders to find the capital to fund us.

We may need to incur additional debt, or issue debt or equity securities in the future, to refinance existing debt, fund working capital requirements, make

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investments, or support other business activities.

We may need to incur additional debt, or issue debt or equity securities in the future, to refinance existing debt, fund working capital requirements, make investments, or support other business activities.

Declines in consumer confidence, decreases in domestic spending, economic contractions, rating agency actions, and other trends in the credit market may impair our future ability to secure financing on satisfactory terms, or at all.

Upgrading our tractors to reduce the average age of our fleet may not increase our profitability or result in cost savings as expected or at all.

Upgrades of our tractor fleet may not result in an increase in profitability or cost savings.

Expected improvements in operating ratio from upgrading our fleet may lag behind new tractor deliveries, as we may experience costs associated with preparing our old tractors for trade and our new tractors for integration into our fleet.

We may also lose driving time while swapping revenue equipment.

Further, tractor prices have increased and may continue to increase, due in part to government regulations applicable to newly manufactured tractors and diesel engines.

In addition, we cannot be certain that an agreement will be reached on price, equipment trade-ins, or other terms that we deem favorable.

If we do enter an agreement for the purchase of new tractors, we could be exposed to the risk that the new tractor deliveries will be delayed.

Accordingly, we are subject to an increased risk that upgrades of our tractor fleet will not result in the operational results, cost savings, and increases in profitability that we expect.

In the future, we may need to obtain additional financing that may not be available or, if it is available, may result in a reduction in the percentage ownership of our then-existing stockholders.

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• potential noncompliance with financial covenants, borrowing conditions, and other debt obligations (where applicable);

lack of financing for working capital, capital expenditures, product development, debt service requirements, and general corporate or other purposes;

limits on our flexibility to plan for, or react to, changes in our business, market conditions, or in the economy.

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• lack of financing for working capital, capital expenditures, product development, debt service requirements, and general corporate or other purposes;

• limits on our flexibility to plan for, or react to, changes in our business, market conditions, or in the economy.

Our debt agreements contain restrictions that limit our flexibility in operating our business.

As detailed in Note 16 to the consolidated financial statements, included in Part II, Item 8 of this Annual Report, our 2017 Debt Agreement requires compliance with various affirmative, negative, and financial covenants.

As detailed in Note 16 to the consolidated financial statements, included in Part II, Item 8 of this Annual Report, we must comply with various affirmative, negative, and financial covenants.

A breach of any of these covenants could result in default or (when applicable) cross-default.

Upon default under our 2017 Debt Agreement, the lenders could elect to declare all outstanding amounts to be immediately due and payable, as well as terminate all commitments to extend further credit.

Upon default under our primary credit facility, the lenders could elect to declare all outstanding amounts to be immediately due and payable, as well as terminate all commitments to extend further credit.

Such actions by those lenders could cause cross-defaults with our other debt agreements.

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If the lenders accelerated our debt repayments, we might not have sufficient assets to repay all amounts borrowed.

In addition, our 2018 RSA includes certain affirmative and negative covenants and cross-default provisions with respect to our 2017 Debt Agreement.

In addition, we have other financing that includes certain affirmative and negative covenants and cross-default provisions.

Failure to comply with these covenants and provisions may jeopardize our ability to continue to sell receivables under the facility and could negatively impact our liquidity.

Uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark may materially and adversely affect our cost of capital.

In July 2017, the U.K.

Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021, which is expected to result in these widely used reference rates no longer being available after 2021.

LIBOR is the reference rate used by our 2017 Debt Agreement and 2018 RSA.

Potential changes to LIBOR, as well as uncertainty related to such potential changes and the establishment of any alternative reference rate, may materially and adversely affect our cost of capital and may require us to renegotiate our existing indebtedness or negatively impact the terms of such indebtedness, which could have a material adverse effect on our business, results of operations, financial condition, and liquidity.

At this time, we cannot predict the overall effect of the modification or discontinuation of LIBOR or the establishment of any alternative benchmark rate.

We could determine that our goodwill and other indefinite-lived intangibles are impaired, thus recognizing a related impairment loss.

As of December 31, 2019 , we had goodwill of $2.9 billion and indefinite-lived intangible assets of $639.9 million primarily from the 2017 Merger.

We have goodwill and indefinite-lived intangible assets on our balance sheet.

We periodically evaluate our goodwill and indefinite-lived intangible assets for impairment.

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If the financial position of any such entity declines, we could be required to write down all or part of our investment in that entity, which could have a materially adverse effect on our results of operations.

Jerry Moyes and certain of his family members and affiliated entities are significant stockholders and we face certain risks related to their significant ownership and related party transactions with Mr.

As of December 31, 2019 , Jerry Moyes, together with his family and related entities, beneficially own approximately 23.9% of our outstanding common stock.

In addition, Mr.

Moyes, together with his family and related entities (collectively, the "Moyes Parties"), have pledged a majority of their holdings as collateral for loans and other obligations, including variable prepaid forward contracts ("VPFs"), which arrangements could create conflicts of interest and adversely affect or increase volatility in the market price of our common stock.

Moyes resigned from the Board on December 21, 2018.

While our stock hedging and pledging policy continues to apply to Mr.

Moyes, we may be unable to enforce , against the Moyes Parties, this policy because Mr.

Moyes no longer serves as a director.

This policy restricts directors, executive officers, and certain Moyes and Knight family holders from engaging in any future pledging or hedging transactions .

The ability of the Moyes Parties to hedge and pledge shares without being restricted under such policy could result in the pledging or hedging of a material amount of additional shares.

If the Moyes Parties were to sell or otherwise transfer all or a large percentage of their holdin gs (including under circumstances in which they settle these

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obligations with shares of our common stock or if they default under the pledging arrangements), the market price of our common stock could decline or be volatile.

According to Schedules 13D/A filed with the SEC by the Moyes Parties, there are approximately 29.5 million shares of our common stock underlying the Moyes Parties’ VPFs.

The Moyes Parties have entered into a Trigger Price Agreement related to the VPFs.

This Trigger Price Agreement requires the Moyes Parties to make certain cash payments if the price of our common stock exceeds a certain trigger price (the last trigger price disclosed by the Moyes Parties was $39.53) and provides that the VPFs can be terminated if the price of our common stock exceeds a certain early termination price (the last early termination price disclosed by the Moyes Parties was $41.70).

Based on the entry into this Trigger Price Agreement, we believe that there is an increased likelihood of default on the VPFs during 2020.

Additionally, the maturity dates of the VPFs range from March 2020 to July 2020 and the floor prices on the VPFs range from $43.20 to $45.50.

Given the current market price of our common stock, we believe there is an increased likelihood that, at the maturity of the VPFs, the Moyes Parties will need to (i) pay a large sum of cash or pledge additional shares of our common stock to extend the VPFs, (ii) cash settle the VPFs, or (iii) share settle the VPFs.

According to a Schedule 13D/A filed with the SEC by the Moyes Parties, the counterparty to the VPFs indicated that in the event the VPFs are terminated as a result of a default and are not cash settled, (i) the counterparty’s short position would already be equal or nearly equal to the number of shares underlying the VPFs and pledged as collateral thereunder;

and (ii) the counterparty would intend to foreclose on the shares of common stock pledged and use such shares to close out its short positions by delivering such shares to the applicable stock lenders (in lieu of selling such shares on the open market).

We have no way of verifying the accuracy of these statements or whether they continue to be accurate.

Additionally, these statements do not discuss the intention of the counterparty if the VPFs are share settled at maturity.

Accordingly, it is difficult to determine the impact of a foreclosure or share settlement of the VPFs on the market price of our common stock.

We do not believe there are any contractual obligations of the counterparty that would prevent it from selling a large number of shares in the open market in the event of a foreclosure or share settlement of the VPFs.

Any sale of such shares could cause the market price of our common stock to decline or be volatile.

We believe Mr.

Moyes has given personal guarantees to lenders to the various businesses and real estate investments in which he has an ownership interest and, in certain cases, the underlying loans are in default and are in the process of being restructured and/or settled.

Moyes is otherwise unable to settle or raise the necessary amount of proceeds to satisfy his obligations to such lenders, he may be subject to significant lawsuits and expose his shares of our common stock to creditors.

Moyes has access to our Executive Chairman and Vice Chairman, and is better positioned than other stockholders to express his views and opinions regarding our operations and strategic alternatives.

Moyes and certain of his family members and affiliated entities are contractually obligated to vote shares of our common stock that they hold in excess of 12.5% of our outstanding shares in the manner determined by a voting committee comprised of Mr.

Moyes, Kevin Knight, and Gary Knight or their respective appointed successors.

Moyes and certain of his family members and affiliated entities are entitled to vote all of their shares of our common stock on any stockholder vote taken to approve a sale of the Company.

Consequently, their influence with respect to any such stockholder vote may have the effect of delaying or preventing a change of control, including a merger, consolidation, or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change of control would benefit our other stockholders.

We engage in various transactions with entities controlled by and/or affiliated with Mr.

Additionally, some entities controlled by Mr.

Moyes and certain members of his family operate in the transportation industry, which may create conflicts of interest or require judgments that are disadvantageous to our stockholders in the event we compete for the same freight or other business opportunities.

As a result, Mr.

Moyes may have interests that conflict with our stockholders.

Additionally, our amended and restated certificate of incorporation contains provisions that specifically relate to prior approval of related party transactions with Mr.

Moyes and certain Moyes-affiliated entities.

However, we cannot assure that the policy or these provisions will be successful in eliminating conflicts of interest.

The market price of our common stock may be volatile.

The price of our common stock may fluctuate widely, depending upon a number of factors, many of which are beyond our control.

These factors include, among other items:

the perceived prospects of our business and our industry as a whole;

differences between our actual financial and operating results as compared to those expected by investors and

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changes in analysts’ recommendations or projections (including such analysts’ outlook on our industry as a whole);

actions or announcements by our competitors;

changes in the regulatory environment in which we operate;

significant sales or hedging of shares by a principal stockholder;

actions taken by stockholders that may be contrary to the Board’s recommendations;

and changes in general economic or market conditions.

In addition, stock markets generally experience significant price and volume volatility from time to time which may adversely affect the market price of our common stock for reasons unrelated to our performance.

The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline.

All shares of our outstanding common stock are freely tradable, except that any shares owned by "affiliates" (as that term is defined in Rule 144 under the Securities Act) may only be sold in compliance with the limitations described in Rule 144 under the Securities Act.

These sales also could make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

In addition, we have an aggregate of 2.9 million shares of common stock reserved for issuance under our compensatory and non-compensatory equity incentive plans.

Issuances of common stock to our directors, executive officers, and employees through exercise of stock options under our compensatory stock plans, or purchases by our executive officers and employees through our 2012 ESPP, dilute a stockholder's interest in the Company.

We may not pay dividends in the future.

Starting in December 2004, and in each consecutive quarter prior to the 2017 Merger, Knight paid a quarterly cash dividend.

Prior to the 2017 Merger, Swift did not pay dividends.

While it is expected we will continue to pay a quarterly dividend, there is no assurance that we will declare or pay any future dividends or as to the amount or timing of those dividends, if any.

UNRESOLVED STAFF COMMENTS

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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 1A. Risk Factors