What changed in this filing

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Item 1. Business

2021-02-23 compared with 2020-02-21 · 109 added, 77 removed, 194 unchanged (49% of the section changed)

Landstar System, Inc.

was incorporated in January 1991 under the laws of the State of Delaware.

It acquired all of the capital stock of its predecessor, Landstar System Holdings, Inc.

(“LSHI”) on March 28, 1991.

Landstar System, Inc.

has been a publicly held company since its initial public offering in March 1993.

LSHI owns directly or indirectly all of the common stock of the following companies collectively referred to herein as Landstar’s “Operating Subsidiaries”:

Landstar Ranger, Inc.

(“Landstar Ranger”), Landstar Inway, Inc.

(“Landstar Inway”), Landstar Ligon, Inc.

(“Landstar Ligon”), Landstar Gemini, Inc.

(“Landstar Gemini”), Landstar Transportation Logistics, Inc.

(“Landstar Transportation Logistics”), Landstar Global Logistics, Inc.

(“Landstar Global Logistics”), Landstar Express America, Inc.

(“Landstar Express America”), and Landstar Canada, Inc.

(“Landstar Canada”).

Landstar System, Inc., LSHI, the Operating Subsidiaries and the other affiliated companies referred to herein are collectively referred to as “Landstar” or the “Company,” unless the context otherwise requires.

The Company’s principal executive offices are located at 13410 Sutton Park Drive South, Jacksonville, Florida 32224 and its telephone number is (904) 398-9400.

was incorporated in January 1991 under the laws of the State of Delaware and has been a publicly held company since its initial public offering in March 1993.

The principal executive offices of Landstar System, Inc.

(collectively with its subsidiaries and other affiliated companies referred to herein as “Landstar” or the “Company,” unless the context otherwise requires) is located at 13410 Sutton Park Drive South, Jacksonville, Florida 32224 and its telephone number is (904) 398-9400.

The Company makes available free of charge through its website its annual report on Form 10-K,

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The SEC maintains a website at http://www.sec.gov that contains the Company’s current and periodic reports, proxy and information statements and other information filed electronically with the SEC.

On September 20, 2017, Landstar Metro, S.A.P.I.

(“Landstar Metro”), a recently formed subsidiary of the Company, acquired substantially all of the assets of the asset-light transportation logistics business of Fletes Avella, S.A.

de C.V., a Mexican transportation logistics company (“Fletes Avella”).

In connection with the acquisition, individuals affiliated with the seller subscribed for equity interests in Landstar Metro and Landstar Metro Servicios S.A.P.I.

(“Landstar Servicios”) and, as of December 29, 2018, owned in the aggregate approximately 21% of the equity interests of each of them.

On January 29, 2019, Landstar acquired all of the remaining equity interests in Landstar Metro and Landstar Servicios held by their former minority equityholders.

Accordingly, as of such date, Landstar Metro and Landstar Servicios each became wholly owned subsidiaries of the Company.

Landstar Metro provides freight and logistics services within the country of Mexico and in conjunction with Landstar’s U.S./Mexico cross-border services.

Landstar Servicios provides various administrative, financial, operational, safety and compliance services to Landstar Metro.

Description of Business

Landstar is a worldwide asset-light provider of integrated transportation management solutions.

The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to enterprise-wide solutions to manage all of a customer’s transportation needs.

The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs.

Landstar provides services principally throughout the United States and to a lesser extent in Canada and Mexico, and between the United States and Canada, Mexico and other countries around the world.

The Company’s services emphasize safety, information coordination and customer service and are delivered through a network of over 1,200 independent commission sales agents and approximately 66,000 third party capacity providers, primarily truck capacity providers, linked together by a series of mobile and digital applications which are provided and coordinated by the Company.

The Company’s services emphasize safety, information coordination and customer service and are delivered through a network of over 1,100 independent commission sales agents and approximately 79,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies which are provided and coordinated by the Company.

The nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.

Landstar markets its integrated transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport customers’ freight.

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contractual arrangements (the “Truck Brokerage Carriers”), air cargo carriers, ocean cargo carriers and railroads.

Through this network of agents and capacity providers linked together by Landstar’s information technology systems, Landstar operates an integrated transportation management solutions business primarily throughout North America with revenue of $4.1 billion during the most recently completed fiscal year.

The nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.

Through this network of agents and capacity providers linked together by Landstar’s series of digital technologies, Landstar operates an integrated transportation management solutions business primarily throughout North America with revenue of $4.1 billion during the most recently completed fiscal year.

The Company reports the results of two operating segments:

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The transportation logistics segment provides a wide range of integrated transportation management solutions.

Transportation services are provided by Landstar’s “Operating Subsidiaries”:

Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc., and as further described below under “ Truck Services

”, Landstar Metro, Landstar Servicios and Landstar Blue.

Transportation services offered by the Company include truckload and less-than-truckload transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, intra-Mexico, intra-Canada, project cargo and customs brokerage.

Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment.

In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers.

Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment.

In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics, small package and less-than-truckload service providers.

Each of the independent commission sales agents has the opportunity to market all of the services provided by the transportation logistics segment.

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The transportation logistics segment’s truck transportation services include a full array of truckload transportation for a wide range of commodities and, to a lesser degree, less-than-truckload transportation services.

A significant portion of the Company’s truckload services is delivered in the spot market over irregular or non-repetitive

routes, while approximately 31% of the Company’s fiscal year 2019 truck transportation revenue was provided utilizing Landstar provided trailing equipment, which frequently is used on more routine, regular routes.

The Company utilizes a broad assortment of equipment, including dry and specialty vans of various sizes, unsided/platform trailers (including flatbeds, drop decks and specialty trailers), temperature-controlled vans and containers.

A significant portion of the Company’s truckload services is priced in the spot market and delivered over irregular or non-repetitive

routes, while approximately 32% of the Company’s fiscal year 2020 truck transportation revenue was generated by BCO Independent Contractors utilizing Landstar provided trailing equipment, which frequently is used on more routine, regular routes.

Available truck transportation services also include short-to-long

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Also, during fiscal year 2020, truck transportation revenue generated via van equipment and unsided/platform trailing equipment was 66% and 32%, respectively, of truck transportation revenue and less-than-truckload revenue was 2% of truck transportation revenue.

The Company’s truck services contributed 92% of consolidated revenue in fiscal year 2019 and 93% of consolidated revenue in both fiscal years 2018 and 2017.

Landstar Metro provides freight and logistics services within the country of Mexico and in conjunction with Landstar’s U.S./Mexico cross-border services.

Landstar Servicios provides various administrative, financial, operational, safety and compliance services to Landstar Metro.

The results of operations from Landstar Metro and Landstar Servicios are presented as part of the Company’s transportation logistics segment.

Revenue from Landstar Metro represented less than 1% of the Company’s transportation logistics segment revenue in fiscal year 2019.

The Company’s truck services contributed 92% of consolidated revenue in fiscal years 2020 and 2019, respectively, and 93% of consolidated revenue in fiscal year 2018.

On May 6, 2020, the Company formed a new subsidiary that was subsequently renamed Landstar Blue.

Landstar Blue arranges truckload brokerage services while helping the Company to develop and test digital technologies and processes for the benefit of all Landstar independent commission sales agents.

On June 15, 2020, Landstar Blue completed the acquisition of an independent agent of the Company whose business focused on truckload brokerage services.

The results of operations from Landstar Blue are presented as part of the Company’s transportations logistics segment.

Revenue from Landstar Blue represented less than 1% of the Company’s transportation logistics segment revenue in fiscal year 2020.

Rail Intermodal Services.

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operating common carrier (“NVOCC”) and ocean freight forwarder.

Through its network of independent commission sales agents, relationships within a global network of foreign freight forwarders and contracts with a number of airlines and ocean lines, the

Through its network of independent commission sales agents, relationships within a global network of foreign transportation intermediaries and contracts with a number of airlines and ocean lines, the

transportation logistics segment provides efficient and cost effective door-to-door

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The insurance segment provides risk and claims management services to certain of Landstar’s Operating Subsidiaries.

In addition, it reinsures certain risks of the Company’s BCO Independent

Contractors and provides certain property and casualty insurance directly to certain of Landstar’s Operating Subsidiaries.

In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s Operating Subsidiaries.

Revenue at the insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk of loss is ultimately borne by Signature.

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contact with its customers is through its network of independent commission sales agents and, to a lesser extent, through employees of the Company.

The typical Landstar independent commission sales agent maintains a relationship with a number of shippers and services these shippers utilizing the Company’s information technology systems and the various modes of transportation made available through the Company’s network of third party capacity providers.

The typical Landstar independent commission sales agent maintains a relationship with a number of shippers and services these shippers utilizing the Company’s digital technologies and extensive network of third party capacity that provides various modes of transportation services to the Company.

The Company provides assistance to the agents in developing additional relationships with shippers and enhancing agent and Company relationships with larger shippers through the Company’s field employees, located throughout the United States and Canada.

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Landstar’s vast network of independent commission sales agent locations provides the Company regular contact with shippers at the local level and the capability to be highly responsive to shippers’ changing needs.

The Company’s large fleet of available capacity provides the agent network the resources needed to service both large and small shippers.

The Company’s large network of available capacity provides independent commission sales agents with the resources needed to service both large and small shippers.

Through its agent network, the Company offers smaller shippers a level of service comparable to that typically enjoyed only by larger customers.

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and delivery points, automated information flow, access to specialized equipment, spotted van trailers and drop-and-hook

In addition, a number of the Company’s agents specialize in certain types of freight and transportation services (such as oversized or heavy loads and/or rail, air and international freight transportation).

While the majority of the agents in the Company’s network arrange truck transportation services for shippers, a number of the Company’s agents specialize in certain types of freight and transportation services (such as oversized or heavy loads and/or rail, air and international freight transportation).

Each independent commission sales agent has the opportunity to market all of the services provided by the transportation logistics segment.

The independent commission sales agents use a variety of proprietary and third party information technology applications provided by the Company to service the requirements of shippers.

The independent commission sales agents use a variety of digital technologies provided by the Company to service the requirements of shippers.

For truckload services, the Company’s independent commission sales agents primarily use Landstar proprietary software which enables agents to enter available freight, dispatch capacity and process most administrative procedures and then communicate that information to Landstar and its capacity providers via the internet.

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available truck information system provides a listing of available truck capacity to the Company’s independent commission sales agents.

The Company also offers independent commission sales agents with a variety of proprietary web-based

pricing, operational and financial tools.

The Company also offers independent commission sales agents a variety of proprietary pricing, operational and financial tools via web or mobile applications.

For modes of transportation other than truckload, the independent commission sales agents utilize both proprietary and third party information technology applications provided by the Company.

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Landstar revenue from the Million Dollar Agents in the aggregate represented 92% and 93% of consolidated revenue in 2020 and 2019, respectively.

Annually, the Company has experienced very

few terminations of its Million Dollar Agents, whether such terminations are initiated by the agent or the Company.

Annual terminations of Million Dollar Agents are typically less than 3% of the total number of Million Dollar Agents.

Management believes that the majority of the Million Dollar Agents choose to represent the Company exclusively.

Historically, the Company has experienced very few terminations of its Million Dollar Agents, whether such terminations are initiated by the agent or the Company.

Annual terminations of Million Dollar Agents have typically been less than 3% of the total number of Million Dollar Agents.

In fiscal year 2020, the change in the number of Million Dollar Agents was entirely attributable to agents generating under $5 million of Landstar revenue per year, as the Company experienced no change in fiscal year 2020 compared to fiscal year 2019 in the number of independent sales agents generating $5 million or more of Landstar revenue.

During fiscal year 2020, the COVID-19

pandemic impacted the number of agents generating under $5 million of Landstar revenue both with respect to existing agents, some of whom had difficulty operating their small businesses during the pandemic due to personal issues, staffing issues and/or customer issues, and with respect to the Company’s ability to recruit new independent sales agents to the Landstar network, given the uncertain operating environment and challenges we experienced in building personal relationships with prospective agent candidates during the pandemic.

Third Party Capacity

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These fuel surcharges are excluded from revenue and the cost of purchased transportation.

The Company maintains internet-based applications for mobile and desktop devices through which BCO Independent Contractors can view a comprehensive listing of the Company’s available freight, allowing them to consider rate, size, origin and destination when planning trips.

The Company maintains an ecosystem of digital technologies and applications through which BCO Independent Contractors can view a comprehensive listing of the Company’s available freight, allowing them to consider rate, size, origin and destination when planning trips.

The Company’s digital applications also provide BCO Independent Contractors information on fueling station locations, retail fuel prices, fuel prices net of Landstar-arranged discounts and applicable state fuel tax credits, and equipment inspection site locations.

The Landstar Contractors’ Advantage Purchasing Program (“LCAPP”) leverages Landstar’s purchasing power to provide discounts to eligible BCO Independent Contractors when they purchase equipment, fuel, tires and other items.

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The number of trucks provided by BCO Independent Contractors fluctuates daily as a result of truck recruiting and truck terminations.

More trucks were recruited in fiscal year 2019 than in fiscal year 2018 but trucks terminated were higher in fiscal year 2019 than in fiscal year 2018, resulting in an overall net decrease of 356 trucks during fiscal year 2019.

Landstar’s BCO Independent Contractor truck turnover was approximately 36% in fiscal year 2019 compared to 24% in fiscal year 2018.

More trucks were recruited in fiscal year 2020 than in fiscal year 2019 and trucks terminated were lower in fiscal year 2020 than in fiscal year 2019, resulting in an overall net increase of 748 trucks during fiscal year 2020.

Landstar’s BCO Independent Contractor truck

turnover was approximately 27% in fiscal year 2020, compared to 36% in fiscal year 2019.

Approximately 38% of 2020 turnover was attributable to BCO Independent Contractors who had been with the Company for less than one year.

Management believes that factors that have historically favorably impacted turnover include the Company’s extensive agent network, the quality of available freight, the Company’s programs to reduce the operating costs of its BCO Independent Contractors and Landstar’s reputation for quality, service, reliability and financial strength.

Management believes the factors that have historically favorably impacted turnover include the Company’s extensive agent network, the quantity and quality of available freight, the Company’s programs to reduce the operating costs of its BCO Independent Contractors and Landstar’s reputation for quality, service, reliability and financial strength.

In October 2020, the Company announced a new initiative in further support of its network of BCO Independent Contractors.

This initiative involved the establishment of multiple field operations centers located in the United States and Canada to further support the Company’s ongoing efforts in recruiting and retaining BCO Independent Contractors.

In connection with this initiative, the Company recorded commission program termination costs of $15,494,000 related to buyouts of certain incentive commission arrangements with several of its independent sales agents due to the Company’s discontinuation of a truck owner-operator recruitment and retention program formerly involving those agents.

Truck Brokerage Carriers.

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The Company recruits, approves, establishes contracts with and tracks safety ratings and service records of these third party trucking companies.

In addition to providing additional capacity to the Company, the use of Truck Brokerage Carriers enables the Company to pursue different types and quality of freight such as temperature-controlled, short-haul traffic and less-than-truckload and, in certain instances, lower-priced freight that generally would not be handled by the Company’s BCO Independent Contractors.

The Company maintains an internet site through which Truck Brokerage Carriers can view a listing of the Company’s freight that is available to them.

In addition to providing additional capacity to the Company, the use of Truck Brokerage Carriers enables the Company to pursue different types and quality of freight such as short-haul traffic, less-than-truckload and, in certain instances, lower-priced freight that generally would not be handled by the Company’s BCO Independent Contractors.

The Company maintains an ecosystem of digital technologies and applications through which Truck Brokerage Carriers can view a listing of the Company’s freight that is available to them.

The Landstar Savings Plus Program leverages Landstar’s purchasing power to provide discounts to eligible Truck Brokerage Carriers when they purchase fuel and equipment and provides the Truck Brokerage Carriers with an electronic payment option.

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Management believes the Company, along with its network of capacity providers, offers one of the largest fleets of heavy/specialized trailing equipment in North America.

At December 28, 2019, 12,733 of the trailers available to the BCO Independent Contractors were owned by the Company and 290 were leased.

At December 26, 2020, 12,831 of the trailers available to the BCO Independent Contractors were owned by the Company and 206 were rented.

In addition, at December 26, 2020, 4,024 trailers were provided by the BCO Independent Contractors.

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The Company’s top 100 customers accounted for approximately 46% and 42%, respectively, of consolidated revenue during fiscal years 2020 and 2019.

Management believes that the Company’s overall size, mobile and digital applications, geographic coverage, access to equipment and diverse service capability offer the Company significant competitive marketing and operating advantages.

Management believes that the Company’s overall size, ecosystem of digital technologies and applications, geographic coverage, access to equipment and diverse service capability offer the Company significant competitive marketing and operating advantages.

These advantages allow the Company to meet the needs of even the largest shippers.

Larger shippers often consider reducing the number of authorized carriers they use in favor of a small number of “core carriers,” such as the Company, whose size and diverse service capabilities enable these core carriers to satisfy most of the shippers’ transportation needs.

Company’s national account customers include the United States Department of Defense and many of the companies included in the Fortune 500.

Large shippers are also using third party logistics providers (“3PLs”) to outsource the management and coordination of their transportation needs.

The Company’s national account customers include the United States Department of Defense and many of the companies included in the Fortune 500.

Large shippers also use third party logistics providers (“3PLs”) to outsource the management and coordination of their transportation needs.

3PLs and other transportation companies also utilize the Company’s available transportation capacity to satisfy their obligations to their shippers.

There were ten transportation service providers, including 3PLs, included in the Company’s top 25 customers for fiscal year 2019.

There were 12 transportation service providers, including 3PLs, included in the Company’s top 25 customers for fiscal year 2020.

Management believes the Company’s network of agents and third party capacity providers allows it to efficiently attract and service smaller shippers which may not be as desirable to other large transportation providers (see above under “Agent Network”).

No customer accounted for more than 4% of the Company’s 2020 revenue.

Management believes leadership in the development, operation and support of mobile and digital software applications is an ongoing part of providing high quality service.

Management believes leadership in the development, operation and support of an ecosystem of digital technologies and applications is an ongoing part of providing high quality service.

Landstar focuses on providing integrated transportation management solutions which emphasize customer service and information coordination among its independent commission sales agents, customers, capacity providers and employees.

The Company continues to focus on identifying, purchasing or developing and implementing software applications and tools which are designed to:

(i) assist Landstar independent commission sales agents in efficiently sourcing capacity, pricing transportation services and managing and analyzing their independent businesses, (ii) assist customers in meeting their transportation needs, (iii) assist our third party capacity providers in identifying desirable freight opportunities and operating their independent businesses, and (iv) improve operational and administrative efficiency throughout the Company.

(i) assist Landstar independent commission sales agents in efficiently sourcing capacity, pricing transportation services and managing and analyzing the performance of the independent businesses, (ii) assist customers in meeting their transportation needs, (iii) assist third party capacity providers in identifying desirable freight opportunities and operating their independent businesses, and (iv) improve operational and administrative efficiency throughout the Company.

Landstar intends to continue to improve its technologies to meet the total needs of its agents, customers and third party capacity providers and remains engaged in various multi-year projects aimed at increasing efficiencies, primarily through technology, at Landstar and across our agent and third party capacity network.

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The Company’s practices of accepting customer credit risk and paying its agents and carriers promptly provides a significant competitive advantage to the Company in comparison to less capitalized competitors.

Landstar competes primarily in the transportation and logistics services industry with truckload carriers, third party logistics companies, digital freight matching companies, intermodal transportation and logistics service providers, railroads, less-than-truckload carriers and other asset-light transportation and logistics service providers.

Landstar competes primarily in the transportation and logistics services industry with truckload carriers, third party logistics companies, digital freight brokers, intermodal transportation and logistics service providers, railroads, less-than-truckload carriers and other asset-light transportation and logistics service providers.

The transportation and logistics services industry is extremely competitive and fragmented.

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amounts of additional premium.

In the event paid aggregate losses under the Initial Excess Policy during any policy year (May 1 to April 30) exceed $10,000,000, the Company would retain liability of up to $10,000,000 per occurrence, inclusive of its $5,000,000 self-insured retention, for the remainder of such policy year.

Moreover, in the event paid aggregate losses under the Initial Excess Policy during the three year period ending April 30, 2022 exceed a pre-determined

threshold amount, the Company would be required to pay additional premium up to a maximum amount of $3,500,000.

As previously disclosed, BCO Independent Contractors with a subsidiary of the Company have been involved in two tragic accidents during the policy year ending April 30, 2020, the first of which occurred in the 2019 third quarter and the second of which occurred in the 2020 first quarter.

With respect to the second accident, the Company is still in the process of obtaining all the facts concerning this incident and, as such, it is too soon to estimate the Company’s ultimate financial exposure.

The Company’s pre-tax

loss exposure at the time of the second accident included its $5,000,000 self-insured retention and up to $3,500,000 in additional premium relating to aggregate losses above its self-insured retention during the policy year ending April 30, 2020.

If, as a result of these or additional accidents, aggregate losses under the Initial Excess Policy during the policy year ending April 30, 2020 exceed $10,000,000, Landstar would retain liability of up to $10,000,000 per occurrence, inclusive of its self-insured retention for commercial trucking claims during the remainder of such policy year.

The Company continues to maintain third party insurance arrangements providing excess coverage on a per occurrence basis for commercial trucking liabilities in excess of $10,000,000.

The Company also retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim.

If aggregate losses under the Initial Excess Policy exceed either the annual aggregate limit or the aggregate limit for the three year period ending April 30, 2022, and the Company did not elect to increase such aggregate limits for a pre-established

amount of additional premium, Landstar would retain liability of up to $10,000,000 per occurrence, inclusive of its $5,000,000 self-insured retention for commercial trucking claims during the remainder of the applicable policy year(s).

Moreover, as a result of the Company’s aggregate loss experience since it entered into the Initial Excess Policy, the Initial Excess Policy required the Company to pay additional premium up to a pre-established

maximum amount of $3,500,000, which was provided for in insurance and claims costs for the Company’s 2020 fiscal first quarter.

The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10,000,000.

These third party arrangements provide coverage on a per occurrence or aggregated basis.

Due to the increasing cost of commercial auto liability claims throughout the United States in recent years, the availability of such excess coverage has significantly decreased and the pricing associated with such excess coverage, to the extent available, has significantly increased.

Effective May 1, 2020 with respect to the annual policy year ending April 30, 2021, the Company experienced an increase of approximately $14 million, or over 170%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10,000,000.

No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels.

Further, the Company retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim.

In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims.

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The transportation industry is subject to other potential regulatory and legislative changes (such as the possibility of more stringent environmental, climate change and/or safety/security regulations, limits on vehicle weight and size and regulations relating to the health and wellness of commercial truck operators) that may affect the economics of the industry by requiring changes in operating practices, by changing the demand for motor carrier services or the cost of providing truckload or other transportation or logistics services, or by adversely impacting the number of available commercial truck operators.

For a discussion of the risks associated with these laws and regulations, see Part I, Item 1A, “Risk Factors.”

Landstar’s operations are subject to seasonal trends common to the trucking industry.

Truckload volumes for the quarter ending in March are typically lower than for the quarters ending in June, September and December.

Human Capital Resources

We believe our employees are among our most important resources and are critical to our continued success.

We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations.

To attract and retain top talent in our highly competitive industry, we have designed our compensation and benefits programs to provide a balanced and effective reward structure.

Our short and long-term incentive programs are aligned with key business objectives and are intended to motivate strong performance.

Our employees are eligible for medical, dental and vision insurance, a 401(k) savings/retirement plan, flexible time-off,

employer-provided life and disability insurance, our wellness program, our tuition reimbursement program, and an array of voluntary benefits designed to meet individual needs.

We engage firms nationally recognized in the benefits area to objectively evaluate our programs and benchmark them against peers and other similarly situated organizations.

As of December 26, 2020, the Company and its subsidiaries employed 1,320 individuals.

Four Landstar Ranger drivers (out of a Company total of approximately 10,243 drivers for BCO Independent Contractors) are members of the International Brotherhood of Teamsters.

Three Landstar Ranger drivers (out of a Company total of approximately 10,991 drivers for BCO Independent Contractors) are members of the International Brotherhood of Teamsters.

The Company considers relations with its employees to be good.

The Company has identified the following employee-focused goals:

Create and maintain an environment in which continuous improvement is encouraged and expected by everyone within the organization;

Engage each Landstar employee in the Company’s vision to inspire and empower entrepreneurs to succeed in the highly competitive, technology driven transportation industry;

Ensure that all Landstar employees fully understand the requirements of their job and the role their job plays within Landstar.

Landstar formally monitors employee satisfaction and engagement through periodic employee satisfaction and engagement surveys.

The Company also uses employee roundtable and focus group discussions as well as exit interviews to monitor engagement and satisfaction.

Landstar also provides comprehensive professional development opportunities to employees at all levels.

Various learning tracks include Leadership, Workplace Safety & Security, Customer Service and other core skills.

Courses are delivered by Landstar’s team of Association for Talent Development (ATD) certified trainers through both on-line

and classroom settings.

At our core, Landstar is about providing opportunity to people regardless of background.

We do not tolerate racism or discriminatory behavior and strongly believe that diversity and inclusion make us stronger as a company.

The Company reaffirms its commitment to equal employment opportunity for all people.

The Company complies with all applicable federal and state laws pertaining to equal employment opportunity and affirmative action.

It is our philosophy to treat our employees and applicants fairly without regard to race, color, sex, religion, national origin, disability, present, past, or future service in a branch of the uniformed services of the United States, citizenship, sexual orientation or gender identity.

Our management teams and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace.

All of our employees must adhere to a code of ethics and employee compliance code that set standards for appropriate behavior and includes required annual training.

During 2020, to address the safety and health of our employees, BCO Independent Contractors, and independent sales agents amidst the COVID-19

pandemic, we implemented the following, among other steps:

Shifting the vast majority of our employees to a remote work environment;

Initiating regular communication to employees regarding impacts of the COVID-19

pandemic, including health and safety protocols and procedures to address actual and suspected COVID-19

cases and potential exposure of our employees;

Establishing physical distancing procedures and providing personal protective equipment and cleaning supplies for employees who need to be on-site;

Increasing cleaning protocols at our offices;

Modifying work spaces with plexiglass dividers, rearranged office layouts and touchless faucets;

Expanding the use of virtual interactions in all aspects of our business;

Cancelling the annual agent convention, BCO All-Star

Celebration and various other events;

Instituting a pandemic relief program whereby Landstar paid an extra $50 for each load delivered by a BCO Independent Contractor with a confirmed delivery date from April 1, 2020 through May 30, 2020 to both the BCO Independent Contractor hauling the load and the independent sales agent dispatching the load;

Providing up to $2,000 to a BCO Independent Contractor who tests positive for COVID-19

or is placed under a mandatory quarantine by a public health authority;

Providing paid time-off

for employees directly impacted by COVID-19,

and instructing those who are infected to stay home;

Prohibiting non-essential

business travel for all employees.

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

What changed 10-K

Item 1. Business