What changed in this filing

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Item 1A. Risk Factors

2023-02-24 compared with 2022-02-25 · 82 added, 99 removed, 222 unchanged (45% of the section changed)

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ports could be opened to foreign-flagged or foreign-built vessels and could have other adverse impacts to our business.

In the past, the Prime Minister of the United Kingdom has suggested that the Jones Act should be a topic of trade negotiations between the U.S.

and the United Kingdom.

The Company’s business would be adversely affected if the Company were determined not to be a U.S.

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Risks Related to the Company’s Operations

Changes in economic conditions or governmental policies, including from the COVID-19 pandemic, have affected and could in the future affect the Company.

The transportation industry in which the Company operates has been impacted by fluctuations, volatility, downturns, inflation, recessions and other economic shifts or market instabilities, as well as the development of and changes in governmental policies and relations, across the jurisdictions in which it operates.

Changes in macroeconomic conditions, geopolitical developments, or governmental policies, including from the COVID-19 pandemic, have affected and could in the future affect the Company.

For example, there have been increases in geopolitical and trade tensions among a number of the world’s major economies.

These tensions have resulted in the implementation of tariffs, non-tariff trade barriers and sanctions, including the use of export control restrictions and sanctions against certain countries and individual companies, which have, and may continue to have, an adverse economic impact in the markets in which the Company operates.

These adverse economic conditions may also impact customers’ business levels and needs.

Within the United States, a weakening of economic drivers in Hawaii and Alaska, which include tourism, military spending, construction, personal income growth and employment, the weakening of consumer confidence, market demand, and the economy in the U.S.

Mainland, inflation, and the effect of a change in the strength of the U.S.

Within the U.S., a weakening of economic drivers in Hawaii, Alaska and Guam, which include tourism, military spending, construction, personal income growth and employment, the weakening of consumer confidence, market demand, and the economy in the U.S.

Mainland, inflation, rising interest rates, recessionary fears and the effect of a change in the strength of the U.S.

dollar against other foreign currencies may reduce the demand for goods, adversely affecting inland and ocean transportation volumes or rates.

In addition, overcapacity in the global or transpacific ocean transportation markets, a change in the cost of goods or currency exchange rates, pressure from U.S.

or foreign governments, imposition of tariffs and uncertainties regarding tariff rates or a change in international trade policies could adversely affect freight volumes and rates in the Company’s China service.

Since March 2020, the COVID- 19 pandemic has harmed the U.S.

and global economies, shut down or limited many business operations, led to port closures, and disrupted manufacturing, rail services, supply chains, travel, drayage of containers and transportation of goods for extended periods of time.

In the United States and in many other countries worldwide, public health officials and state and local governments have recommended or mandated a range of precautions to mitigate the spread of COVID- 19 and its variants as they evolve and fluctuate in their global impacts.

The full impact of such disruptions on the Company’s business remains uncertain.

The pandemic and related uncertainties and restrictions have previously reduced tourism in the markets the Company serves, including Hawaii, Guam and Alaska, and led to increased unemployment and weakened consumer demand in certain segments, including reduced demand for freight that the Company would otherwise carry in those tradelanes.

Fluctuations in the price of oil and reduced demand from the decline in air or car travel in response to COVID-19 could further impact the Alaskan economy, which in turn could impact the Company’s business.

In addition, the global macroeconomic effects of the pandemic and related impacts on the Company’s customers’ business operations, including financial difficulties or bankruptcies, may persist for an indefinite period, even after the pandemic has subsided.

In the Company’s China service, as a result of the pandemic, the Company has experienced increased demand for its expedited ocean services.

As the pandemic subsides, supply and demand trends normalize and supply chain congestion eases, the high volumes and rates the Company has experienced will eventually decline, but the Company cannot predict the timing or size of such decline.

These declines will reduce revenues, but certain fixed costs will remain.

For example, the Company cannot terminate leases early for chartered vessels in the CLX+ service.

The high volumes of freight from China and supply chain congestion at U.S.

West Coast ports have contributed to an industry-wide shortage of containers and chassis, resulting broadly in delays, backlog, limited throughput, cancelled sailings, and service interruptions within tradelanes and supply chains, as well as long lead times for new equipment.

There have also been labor shortages at U.S.

ports related to record cargo volume, the overall employment environment and wage pressures, and outbreaks of COVID-19 which has also contributed to supply chain and port congestion.

If the Company cannot secure sufficient equipment or labor, or unload vessels on a timely basis to meet customers’ needs and schedules, customers may seek to have their transportation and logistics needs met by others on a temporary or permanent basis.

The Company’s operations have also been impacted by the pandemic.

The Company’s employees are restricted in their ability to travel.

The Company may be further impacted if its employees, including mariners aboard our vessels, are otherwise restricted from or unable to perform their duties, or if the Company’s or SSAT’s terminals are temporarily closed due to a COVID-19 outbreak.

or foreign governments, imposition of tariffs

and uncertainties regarding tariff rates or a change in international trade policies could adversely affect freight volumes and rates in the Company’s CLX and CLX+ services.

Fluctuations in the price of oil could further impact the Alaskan economy, which in turn could impact the Company’s business.

As the COVID-19 pandemic subsides, supply and demand trends normalize, and supply chain congestion eases, the high volumes and rates the Company previously experienced in its China service have declined, but the Company cannot predict the size and duration of such decline.

These declines have reduced and are expected to continue to reduce revenues, but certain fixed costs remain.

For example, the Company cannot terminate leases early for chartered vessels in the CLX+ service absent a breach by vessel owners.

The Company’s operations may be further impacted if its employees, including mariners aboard our vessels, are otherwise restricted from or unable to perform their duties, the Company’s or SSAT’s terminals are temporarily closed, or there are outbreaks aboard the Company’s vessels that cause the Company to miss port calls, due to a COVID-19 outbreak.

Some vessel dry-dockings could also be delayed or become more expensive if shipyards are unable to accommodate demand or obtain parts in a timely manner or if necessary personnel are not allowed to travel to the shipyards.

Due to the continuing uncertainty around the duration, breadth and severity of the COVID-19 pandemic, including resurgences or mutations of the virus and the actions taken to contain the virus or treat its impact, including the

availability, distribution, efficacy and public acceptance of vaccines, the ultimate impact on the Company’s business, financial condition, operating results or cash flows are difficult to predict with certainty at this time.

Additional or unforeseen effects from the COVID-19 pandemic may give rise to additional risks or instigate or amplify the other risks described throughout these Risk Factors.

As the COVID-19 pandemic reaches endemic stages, the future impact on the Company’s business, financial condition, operating results or cash flows remains difficult to predict at this time.

Additional or unforeseen effects from COVID-19, including resurgences or mutations of the virus and the actions taken in response to the virus, may give rise to additional risks or instigate or amplify the other risks described throughout these Risk Factors.

The shipping industry is competitive, and the Company has been impacted by new or increased competition.

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Ocean carriers can shift vessels in and out of tradelanes or charter vessels to manage capacity and meet customer demands.

For example, in 2020 and 2021, in response to rising demand, several new carriers entered the China tradelane in competition with the Company’s China service.

The entry of a new competitor or the addition of new vessels or capacity by existing competition on any of the Company’s routes could result in a significant increase in available shipping capacity that could have an adverse effect on the Company’s volumes and rates.

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The loss of or damage to any of these key relationships may adversely affect the Company’s business and revenue.

The Company is dependent upon key vendors and third-parties for equipment, capacity and services essential to operate its business, and if the Company fails to secure sufficient third-party services, its business could be adversely affected.

The Company is dependent upon key vendors and third parties for equipment, capacity, facilities, infrastructure and services essential to operate its business, and if the Company fails to secure sufficient third-party services, its business could be adversely affected.

The Company’s businesses are dependent upon key vendors who provide terminal, rail, truck, and ocean transportation services.

If the Company cannot secure sufficient transportation equipment, capacity or services from these third-parties at reasonable prices or rates to meet its or its customers’ needs and schedules, customers may seek to have their transportation and logistics needs met by others on a temporary or permanent basis.

If the Company cannot secure sufficient transportation equipment, capacity or services from these third parties at reasonable prices or rates to meet its or its customers’ needs and schedules, customers may seek to have their

transportation and logistics needs met by others on a temporary or permanent basis.

If this were to occur, the Company’s business, results of operations and financial condition could be adversely affected.

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Fuel is a significant operating expense for the Company’s Ocean Transportation business.

The price and supply of fuel are unpredictable and fluctuate based on events beyond the Company’s control.

The price and supply of fuel are unpredictable and fluctuate based on events beyond the Company’s control, including impacts from global macroeconomic conditions and geopolitical events.

Increases in the price of fuel may adversely affect the Company’s results of operations.

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In the Company’s Ocean Transportation and Logistics services segments, the Company utilizes fuel-related surcharges, although increases in the fuel-related surcharge may adversely affect the Company’s competitive position and may not correspond exactly with the timing of increases in fuel expense.

Changes in the Company’s ability to collect fuel-related surcharges also may adversely affect its results of operations.

Effective January 1, 2020, the IMO imposed a world-wide regulation generally requiring that all ships burn compliant fuel oil with a maximum sulfur content of less than or equal to 0.5 percent.

Currently, LSFO is typically priced higher than HFO due to the need for further oil refinement.

In some market instances, the prices between the two products could be inverted.

There is no guarantee that the Company’s contracts to secure LSFO or HFO on the U.S.

West Coast will secure quantities in sufficient amounts and at a reasonable cost.

In addition, prolonged use of LSFO on some

Matson vessels could degrade engine performance or lead to higher maintenance costs.

The Company’s ability to recover the higher costs of IMO 2020 compliant fuel through fuel- related surcharges, the availability of LSFO, and the potential impact on vessel performance may adversely affect the Company’s operations, business and profit.

Changes in the Company’s ability to collect fuel-related surcharges, including recovery of all or most fuel-related expenses, also may adversely affect its results of operations.

Evolving stakeholder expectations related to environmental, social and governance (“ESG”) matters exposes the Company to heightened scrutiny, additional costs, operational challenges and a number of risks.

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The adoption and expansion of ESG-related legislation and regulation have also resulted and may again result in increased capital expenditures and compliance, operational and other costs to the Company.

The Company’s public disclosures on its climate, sustainability, human capital and other ESG initiatives include its goals or expectations with respect to those matters, including greenhouse gas (“GHG”) emission reduction targets.

These disclosures are aspirational and based on standards and frameworks for presenting and measuring progress that are not harmonized and are still developing, assumptions that may change, and disclosure controls and procedures that continue to evolve.

The Company’s initiatives and goals may not be favored by certain stakeholders and could impact the attraction and retention of investors, customers and employees, as well as the Company’s willingness to do business with other companies or customers.

Efforts to achieve the Company’s initiatives and goals face numerous risks and may be unsuccessful, result in additional costs or experience delays, and as a result may have a material negative impact on the Company, including its brand, reputation and stock price.

Efforts to achieve the Company’s initiatives and goals face numerous risks and may be unsuccessful, result in additional costs or experience delays, and as a result may have an adverse impact on the Company, including its brand, reputation and stock price.

The Company may not be timely or successful in completing its fleet upgrade initiatives, which may result in significant costs and adversely impact the Company’s ability to meet its climate goals.

The Company’s four new Aloha and Kanaloa class vessels include dual fuel capable engines that can run on LSFO or liquefied natural gas (“LNG”).

In November 2021, the Company announced plans to install tanks, piping and cryogenic equipment on Daniel K.

Inouye and to re-engine Manukai to operate on LNG.

The Company also expects to begin LNG installations on Kaimana Hila , Lurline and Matsonia , and to build three new LNG-ready vessels.

In addition, the Company is in the process of building a new neighbor island flat-deck barge.

The Company’s four new Aloha and Kanaloa class vessels include dual fuel capable engines that can run on low sulfur fuel oil or LNG.

The Company has announced plans to install tanks, piping and cryogenic equipment on Daniel K.

Inouye and Kaimana Hila , and re-engine Manukai to operate on LNG.

In addition, the Company has announced plans to construct three new LNG-ready Aloha Class vessels.

The Company anticipates making significant capital expenditures in connection with these fleet initiatives.

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Once completed, operation of these vessels may be slowed to the extent they present new maintenance requirements or unforeseen complications.

Use of LNG fuel may not result in anticipated GHG emission reductions, and the Company’s investments in LNG- ready vessels may be insufficient to meet the Company’s previously announced GHG emission reduction goals on a timely basis or at all.

Use of LNG fuel may not result in anticipated GHG emission reductions, and the Company’s investments in LNG-ready vessels, whether on their own or in addition to other Company initiatives, may be insufficient to meet the Company’s previously announced GHG emission reduction goals on a timely basis or at all.

There is no guarantee that the Company will be able to secure LNG via bunker barges or other methods on the U.S.

West Coast in sufficient amounts to fuel its vessels or at a reasonable cost, as increased demand for LNG could decrease available supply of LNG and increase prices.

West Coast or in China in sufficient amounts to fuel its vessels or at a reasonable cost, as increased demand for LNG could decrease available supply of LNG and

increase prices.

Governments have in the past and may again in the future impose tariffs on LNG that also may increase supply costs.

As a result of these risks, the Company may not fully realize the benefits of these investments.

The Company’s vessel construction agreements with Philly Shipyard subject the Company to risks.

On November 1, 2022, MatNav and Philly Shipyard entered into vessel construction agreements pursuant to which Philly Shipyard will construct three new 3,600-TEU Aloha Class dual-fuel capable containerships, with expected delivery dates during the fourth quarter of 2026 and subsequent deliveries currently expected in the second and fourth quarters of 2027.

Failure of any party to the vessel construction agreements to fulfill its obligations under the agreements could have an adverse effect on the Company’s financial position and results of operations.

Such a failure could happen for a variety of reasons, including but not limited to (i) delivery delays, (ii) delivery of vessels that fail to meet any of the required operating specifications (for example, capacity, fuel efficiency or speed), (iii) events in South Korea that prevent one or more significant subcontractors to Philly Shipyard from performing, (iv) loss of key personnel at either Philly Shipyard or any of its subcontractors, (v) work stoppages or other labor disruptions that may occur as a result of the failure of Philly Shipyard to negotiate collective bargaining agreements with its unions, or (vi) the insolvency of, or the refusal or inability to perform for any reason, by Philly Shipyard or any of its subcontractors.

Significant delays in the delivery of the new vessels could limit our ability to replace aging vessels in the Alaska service without substantial modifications, which could also have an adverse impact on our business plans, financial condition and results of operations.

The Company’s operations are susceptible to weather, natural disasters, maritime accidents, spill events and other physical and operating risks, including those arising from climate change.

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Such events interfere with the Company’s ability to provide on-time scheduled service, resulting in increased expenses and potential loss of business associated with such events.

In addition, severe weather

and natural disasters can result in interference with the Company’s terminal operations and may cause serious damage to its vessels and cranes.

These impacts could be particularly acute in certain ports in Alaska where the Company is dependent on a single crane.

In addition, severe weather and natural disasters can result in interference with the Company’s terminal operations and may cause serious damage to its vessels and cranes.

These impacts could be particularly acute in ports such as Dutch Harbor and Kodiak, Alaska where the Company is dependent on a single crane.

The Company’s vessels and their cargoes are also subject to operating risks such as mechanical failure, collisions and human error.

The occurrence of any of these events may result in damage to or loss of vessels, containers, cargo and other equipment, increased maintenance expense, loss of life or physical injury to its employees or people, pollution, or the slow down or suspension of operations.

The occurrence of any of these events may result in damage to or loss of terminals, port facilities and infrastructure, vessels, containers, cargo and other equipment, increased maintenance expense, loss of life or physical injury to its employees or people, pollution, or the slow down or suspension of operations.

These events can expose the Company to reputational harm and liability for resulting damages and possible penalties that, pursuant to typical maritime industry policies, it must pay and then seek reimbursement from its insurer.

Affected vessels may also be removed from service and thus would be unavailable for income-generating activity.

Furthermore, the Port of Alaska requires upgrades to its port facilities and infrastructure to improve operational safety and efficiency, accommodate modern shipping operations and improve resiliency, as well as to mitigate the risk of failure due to corrosion or loss of load-bearing capacity.

As a result, there is an increased risk that an earthquake or other natural disaster could damage or render inoperable, in whole or in part, port facilities and infrastructure at the Port of Alaska.

This, in turn, could adversely affect transportation volumes or rates in Alaska and adversely impact the Company’s Ocean Transportation business and Span Alaska’s freight forwarding business, particularly given the Alaskan economy’s dependence on this port for ocean cargo.

The Company’s casualty and liability insurance policies are generally subject to large retentions and deductibles and may not cover all losses the Company may incur.

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Organizational, industrial and governmental shifts in operations as well as legal and regulatory requirements to reduce or eliminate emissions and/or increase efficiency may require the Company to increase expenditures, make changes to existing infrastructure, vessels and equipment and shift its business model.

For example, the maritime industry is moving toward deployment of clean energy technologies and use of electricity powered by renewable energy sources to power terminal operations as a way to reduce shoreside greenhouse gas emissions.

As the Company and SSAT increase their reliance on the power grid at terminals, including for cold-ironing and ground service fleets, the Company may experience increased risks related to power outages, brown outs or black outs.

The likelihood of these risks is compounded by uncertainties regarding the reliability of renewable energy sources as well as any increased frequency of extreme weather events that may disrupt the generation or transmission of electricity.

In addition, compliance with new climate change requirements or regulations such as the IMO’s requirements related to EEXI and CII could require Matson’s fleet to slow down if efficiency improvements or transitions to alternative fuels together are not enough to reduce GHG emissions sufficiently, thus impacting Matson’s expedited business model and competitive advantage.

In addition, compliance with new climate change requirements or regulations such as the IMO’s requirements related to EEXI and CII may create schedule disruptions and could require Matson’s fleet to slow down if efficiency improvements or transitions to alternative fuels together are not enough to reduce GHG emissions sufficiently, thus impacting Matson’s expedited business model and competitive advantage.

New environmental requirements for vessel performance and operation could also require the Company to accelerate the building of new vessels, increase the construction costs for new vessels and equipment to accommodate even newer technology as it emerges while today’s technology becomes obsolete, initiate unexpected retrofit projects for existing vessels, retire older vessels earlier than expected, or render reserve vessels unusable.

If these outcomes were to occur, the Company’s business, results of operations, cash flows and financial condition could be adversely affected.

In addition to the COVID-19 pandemic, the Company faces risks related to actual or threatened health epidemics, pandemics or other major health crises, which could significantly disrupt the Company’s business.

The Company faces risks related to actual or threatened health epidemics, pandemics or other major health crises, such as the COVID-19 pandemic, which could significantly disrupt the Company’s business.

The Company’s business could be impacted adversely by the effects of public health epidemics, pandemics or other major heath crises (which the Company refers to collectively as public health crises).

Actual or threatened public health crises may have a number of adverse impacts, including volatility in the global economy, impacts to the Company’s customers’ business operations, reduced tourism in the markets the Company serves, or significant disruptions in ocean-borne transportation of goods, logistics demand and supply chain activity, caused by a variety of factors such as quarantines, factory and office closures, port closures, or other government-imposed restrictions, any of which could adversely impact the Company’s business, financial condition, operating results and cash flows.

The Company’s significant operating agreements and leases could be replaced on less favorable terms or may not be replaced when they expire.

not be replaced with comparable assets with the specifications necessary for the Company’s or SSAT’s businesses or could be replaced on less favorable terms, thereby adversely affecting the Company’s future financial position, results of operations and cash flows.

Actual or threatened public health crises may have a number of adverse impacts, including volatility in the global economy, impacts to the Company’s customers’ business operations, reduced tourism in the markets the Company serves, potential restrictions on employee travel, or significant disruptions in ocean-borne transportation of goods, logistics demand and supply chain activity, caused by a variety of factors such as quarantines, factory and office closures, port closures, or other government-imposed restrictions, any of which could adversely impact the Company’s business, financial condition, operating results and cash flows.

The Company’s significant operating agreements and leases could be replaced on less favorable terms or may not be replaced on acceptable terms.

The significant operating agreements and leases entered into by the Company in its businesses, including those related to terminals, chartered vessels and warehouses as well as those with SSAT, expire at various points in time and may not be replaced with comparable assets with the specifications necessary for the Company’s or SSAT’s businesses or could be replaced on less favorable terms, thereby adversely affecting the Company’s future financial position, results of operations and cash flows.

The Company may face unexpected dry-docking or repair costs for its vessels.

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The Company could be adversely affected by any changes in the services provided or to the costs of such services provided by SSAT.

Furthermore, the Company’s results of operations have been and may continue to be impacted by lower contributions from SSAT, including as a result of declines in detention and demurrage revenue and lift volumes due to reduced carrier volumes into U.S.

West Coast ports.

The Company is subject to risks associated with conducting business in foreign shipping markets.

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● The Company’s ability to manage changes in the cost of goods or currency exchange rate fluctuations;

● Political and economic instability;

● Geopolitical and economic instability;

● Economic downturns or slower growth in the local markets or geographic areas in which we conduct business;

● Dynamics involving U.S.

trade relations with other countries, including the imposition of or uncertainty associated with the level of tariffs or other governmental actions.

trade relations with other countries, including the imposition of or uncertainty associated with the level of tariffs, non-tariff trade barriers or sanctions, including the use of export control restrictions and sanctions against certain countries and individual companies, or other governmental actions.

The Company’s terminals in Hawaii and Alaska require modernization.

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Significant additional upgrades and projects remain.

The Company has also continued discussions with state and local authorities in Anchorage, Alaska regarding upgrades to those terminal and port facilities.

Regulatory, construction or other delays or cost overruns related to the expansion and modernization of the terminals could have an adverse impact

on the Company’s business plans, financial condition and results of operations.

The Company is also continuing discussions with state and local authorities regarding a port modernization program for the Port of Alaska.

Significant upgrades to the terminal and port facilities are needed to improve operational safety and efficiency, accommodate modern shipping operations, and improve resiliency.

For example, the aging docks of the port are increasingly exposed to the risk of failure due to corrosion and the loss of load-bearing capacity particularly in the event of extreme seismic events or other natural disasters.

Regulatory, construction or other delays or cost overruns related to the expansion and modernization of the terminals could have an adverse impact on the Company’s business plans, financial condition and results of operations.

In addition, the terminal modernization programs may not result in improved operational productivity or generate expected returns.

Heightened security measures, war, actual or threatened terrorist attacks, efforts to combat terrorism and other acts of violence may adversely impact the Company’s operations and profitability.

War, terrorist attacks and other acts of violence may cause consumer confidence and spending to decrease, or may affect the ability or willingness of tourists to travel to Hawaii, Guam or Alaska, thereby adversely affecting those economies and the Company.

Additionally, future terrorist attacks could increase volatility in the U.S.

War, including the war in Ukraine, terrorist attacks and other acts of violence may cause consumer confidence and spending to decrease, or may affect the ability or willingness of tourists to travel to Hawaii, Guam or Alaska, thereby adversely affecting those economies and the Company.

Wars or terrorism could impact global supply chains due to changes in vessel routing, product sourcing decisions, or governmental sanctions or restrictions.

Additionally, acts of war and future terrorist attacks could increase volatility in the U.S.

and worldwide financial markets.

Acts of war or terrorism may be directed at the Company’s shipping operations, or may cause the U.S.

Acts of war or terrorism may also be directed at the Company’s shipping operations or may cause the U.S.

government to take control of Matson’s vessels for military operation.

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The Company’s growth strategy includes expansion through acquisitions, including, for example, the Company’s acquisitions of Horizon Lines, Inc.

(“Horizon”) in 2015 and Span Intermediate, LLC (“Span Alaska”) in 2016.

(“Horizon”) in 2015 and Span Alaska in 2016.

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

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The Company has been adversely affected by actions taken by employees of the Company or other companies in related industries against efforts by management of the Company or other companies to control labor costs, restrain wage or benefit increases or modify work practices.

Strikes, slow-downs and disruptions have occurred as a result of the failure of Matson or other companies in its industry to negotiate collective bargaining agreements with such unions successfully.

In the past, strikes, slow-downs and disruptions have occurred as a result of the failure of Matson or other companies in its industry to negotiate collective bargaining agreements with such unions successfully.

Matson and SSAT are members of the PMA, which on behalf of its members negotiates collective bargaining agreements with the ILWU on the U.S.

The PMA/ILWU collective bargaining agreements that cover substantially all U.S.

West Coast longshore labor expired on July 1, 2022.

These collective bargaining agreements are being negotiated, but if such agreements are not renewed, Matson and SSAT could be subject to future slow-downs, strikes, lock-outs or other disruptions that may adversely impact Matson’s or SSAT’s operations.

In addition, any slow-downs, strikes, lock-outs or other disruptions, including limits on the availability of labor through trade union hiring halls, have had and in the future, particularly in years when collective bargaining agreements are being negotiated, could have an adverse impact on Matson’s or SSAT’s operations.

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The permanent or temporary loss of the services of key personnel could adversely affect the Company’s future operating results because of such employees’ experience with and knowledge of the Company’s business and customer relationships.

If key personnel and skilled employees depart or are unable to work, the Company’s ability to execute its business model could be impaired to the extent it cannot replace such personnel or sufficiently train new personnel in a timely manner.

If key personnel and skilled employees depart or are unable or unwilling to work, the Company’s ability to execute its business model could be impaired to the extent it cannot replace such personnel or sufficiently train new personnel in a timely manner.

In addition, the Company may incur significant costs to replace these employees.

Company can meet its labor needs is subject to a variety of pressures, including market compensation and benefit levels, which may be impacted by pressure within the industry to increase wages, including due to the threat of a labor strike;

the availability of labor, which may be impacted by national and global labor trends including higher-than-normal levels of individuals leaving the workforce during COVID-19 and industry trends including aging workforces that may reduce the available pool of skilled workers;

Whether the Company can meet its labor needs is subject to a variety of pressures, including market compensation and benefit levels, which may be impacted by pressure within the industry to increase wages, including due to the threat of a labor strike;

the availability of labor, which may be impacted by national and global labor trends including higher-than-normal levels of individuals leaving the workforce and industry trends including aging workforces that may reduce the available pool of skilled workers;

a mismatch of skills or experience to support the evolving needs of the Company’s business;

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These efforts and the Company’s reputation may also be impacted by any failure or perceived failure to meet or timely progress on publicly disclosed human capital-related goals and initiatives, including with respect to diversity, equity and inclusion, or to compare favorably with the progress or goals of its industry or peers.

In addition, the Company may be subject to federal, state or local vaccine or other COVID-19 related mandates (including as a U.S.

government contractor) and enforcement of such mandates may result in reputational harm, labor disruption and increased operating costs and impact the Company’s ability to attract and retain qualified talent, among other risks.

Risks Related to Information Technology

If the Company is not able to use its information technology and communications systems effectively, the Company’s ability to conduct business might be negatively impacted.

The Company is highly dependent on the proper functioning of our information technology systems to enable operations and compete effectively.

The Company is highly dependent on the proper functioning of its information technology systems to enable operations and compete effectively.

The Company regularly updates its information technology systems or implements new systems, which could cause substantial business interruption.

There is no assurance that the systems upgrades or new systems will meet the Company’s current or future business needs, or that they will operate as designed.

For example, the Company recently completed a multi-year process to implement a new enterprise resource planning, or ERP, system intended to enhance operating efficiencies and provide more effective management of its business operations.

System enhancements are on-going.

The Company’s information technology systems also rely on third-party service providers for access to the Internet, satellite-based communications systems, the electric grid, database storage facilities and telecommunications providers.

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In the past, disruptions in the Company’s third-party service providers have impacted the Company’s operations, including the Company’s ability to book and manage freight, stow vessels, and process customs declarations.

During periods where government and health officials recommended or required doing so in response to the COVID-19 pandemic, some of the Company’s employees worked from home or remotely, increasing the Company’s dependence on its information technology systems and third-party providers during that time.

In the past, some of the Company’s employees worked from home or remotely, increasing the Company’s dependence on its information technology systems and third-party providers during those times.

If the Company’s information technology and communications systems experience reliability issues, integration or compatibility concerns or if the Company’s third-party providers are unable to perform effectively or experience disruptions or failures, there could be an adverse impact on the availability and functioning of the Company’s information technology and communications systems, which could lead to business disruption or inefficiencies, reputational harm or loss of customers.

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The Company also collects, stores and transmits sensitive data, including its proprietary business information and that of its customers, and personally identifiable information of its customers and employees.

Despite the Company’s continuous efforts to make investments in the Company’s information technology systems and system-wide data security program, the implementation of security measures to protect the Company’s data and infrastructure against breaches and other cyber threats, and the Company’s use of internal processes and controls designed to protect the security and availability of the Company’s systems, the Company has in the past experienced and may in the future experience cybersecurity risks, such as computer viruses, hacking, malware, denial of service attacks, cyber terrorism, circumvention of security systems, malfeasance, breaches due to employee error, natural disasters, telecommunications failure, or other catastrophic events at the Company’s facilities, aboard its vessels or at third-party locations.

Despite the Company’s continuous efforts to make investments in the Company’s information technology systems and system-wide data security program, the implementation of security measures to protect the Company’s data and infrastructure against breaches and other cyber threats, and the Company’s use of internal processes and controls designed to protect the security and availability of the Company’s systems, the Company has in the past experienced and may in the future experience cybersecurity incidents, such as computer viruses, hacking, malware, denial of service attacks, cyber terrorism, ransomware, circumvention of security systems, malfeasance, breaches due to employee error, natural disasters, telecommunications failure, or other catastrophic events at the Company’s facilities, aboard its vessels or at third-party locations.

Any failure, breach or unauthorized access to the Company’s systems or those of third parties on which the Company relies could result in the loss of confidential, sensitive or proprietary information, interruptions in its service or production or otherwise impact the Company’s ability to conduct business operations, and could result in potential reductions in revenue and profits, damage to its reputation or liability.

Risks Related to Financial Matters

The Company may be required to record a significant charge to earnings if recorded intangible assets associated with the Span Alaska acquisition become impaired.

The Company recorded significant intangible assets related to goodwill, customer relationships and trade name arising from the Span Alaska acquisition.

The Company is required to test goodwill for impairment annually, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Factors that could lead to an impairment of goodwill or intangible customer relationships include any significant adverse changes affecting the reporting segment’s financial condition, results of operations, and future cash flows.

A deterioration of the Company’s credit profile, disruptions of the credit markets or higher interest rates could restrict its ability to access the debt capital markets or increase the cost of debt.

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If the Company’s credit profile deteriorates significantly, its access to the debt capital markets or its ability to renew its committed lines of credit may become restricted, or the Company may not be able to refinance debt at the same levels or on the same terms.

Because the Company relies on its ability to draw on its revolving credit facilities to support its operations when required, any volatility in the credit and financial markets that prevents the Company from accessing funds (for example, a lender that does not fulfill its lending obligation) could have an adverse effect on the Company’s financial condition and cash flows.

Because the Company relies on its ability to draw on its revolving credit facility to support its operations when required, any volatility in the credit and financial markets that prevents the Company from accessing funds (for example, a lender that does not fulfill its lending obligation) could have an adverse effect on the Company’s financial condition and cash flows.

Additionally, the Company’s credit agreements generally include an increase in borrowing rates if the Company’s credit profile deteriorates.

Furthermore, the Company incurs interest under its revolving credit facilities based on floating rates.

Floating rate debt creates higher debt service requirements if market interest rates increase, as may be the case in connection with the U.S.

Federal Reserve’s announced plans to increase interest rates in 2022, which would adversely affect the Company’s cash flow and results of operations.

In addition, the floating rate on certain borrowings under the Company’s revolving credit facility is tied to LIBOR.

Regulators in the United States and other countries have begun to phase out the use of LIBOR, with a complete phase out of U.S.

dollar LIBOR rates currently expected by June 2023.

Uncertainty regarding the transition from LIBOR to an alternate benchmark rate or rates could pose funding risks for the Company and adversely affect the Company’s financing costs.

Disruptions to the credit markets as a result of the COVID-19 pandemic or other macroeconomic or financial market developments could increase the Company’s cost of capital and limit the Company’s access to capital.

Furthermore, the Company incurs interest under its revolving credit facility based on floating rates.

Floating rate debt creates higher debt service requirements if market interest rates increase, as has been the case in connection with the U.S.

Federal Reserve’s interest rate increases in 2022, which could adversely affect the Company’s cash flow and results of operations.

Disruptions to the credit markets as a result of macroeconomic, geopolitical, or financial market developments could increase the Company’s cost of capital and limit the Company’s access to capital.

Failure to comply with certain restrictive financial covenants contained in the Company’s credit facilities could preclude the payment of dividends, impose restrictions on the Company’s business segments, capital resources or other activities or otherwise adversely affect the Company.

The Company’s credit facilities contain certain restrictive financial covenants, the most restrictive of which include a maximum ratio of debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”), a minimum ratio of EBITDA to interest expense, certain prohibitions on additional priority debt, certain prohibitions on sale and leaseback transactions, and the maintenance of minimum shareholders’ equity.

The Company’s credit facilities contain certain restrictive financial covenants, the most restrictive of which include a maximum ratio of debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”), a minimum ratio of EBITDA to interest expense, certain prohibitions on additional priority debt and the maintenance of minimum shareholders’ equity.

If the Company does not maintain these and other required covenants, and a breach of such covenants is not cured timely or waived by the lenders, resulting in a default, the Company’s access to credit may be limited or terminated, dividends may be suspended, and the lenders could declare any outstanding amounts due and payable.

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health, safety and the protection of the environment and natural resources;

and climate change, including any regulations, mandates or restrictions related to greenhouse gas emissions, such as a “cap and trade” system of allowances and credits, and energy use.

Any changes in applicable laws and regulations, including their enforcement, interpretation or implementation that results in more stringent requirements than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional costs and limitations on the Company’s ability to operate.

and climate change, including any regulations, mandates or restrictions related to GHG emissions, such as a “cap and trade” system of allowances and credits, and energy use.

Any changes in applicable laws and regulations, including their enforcement, interpretation or implementation that results in more stringent requirements

than currently anticipated, as well as any new laws and regulations that are adopted could impose significant additional costs and limitations on the Company’s ability to operate.

Mitigation strategies or contingency plans to remain in compliance with applicable laws and regulations may be unsuccessful, result in additional costs or experience delays.

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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