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We may also be adversely impacted by other risks not presently known to us or that we currently consider immaterial.
+Added: Although the risks below are organized by headings and each risk is discussed separately, many are interrelated.
Risks Related to our Business and Operations
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Our growth strategy includes increasing the volume of freight moving through our existing service center network primarily by increasing our market share and selectively expanding our capacity in the United States.
−Removed: In connection with our growth strategy, at various times, we have consistently expanded and upgraded our service center network, purchased additional equipment and increased our sales and marketing efforts, and we expect to continue to do so.
+Added: In connection with our growth strategy, at various times, we have consistently expanded and upgraded our service center network, purchased additional equipment and increased
+Added: our sales and marketing efforts, and we expect to continue to do so.
Our growth strategy exposes us to a number of risks, including the following:
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If we fail to overcome those risks, we may not realize projected growth and related revenue or profits from our efforts, we may incur additional expenses and, as a result, our financial position and results of operations could be materially and adversely affected.
+Added: Various economic factors such as inflationary pressures or downturns in the domestic economy could adversely impact our profitability and cash flows.
+Added: Inflationary pressures have been significant in the United States in recent years.
+Added: Inflation impacts the cost to operate our business by putting upward pressure on wages, benefits, real estate, equipment, fuel, parts and repairs, insurance, and other general and miscellaneous expenses.
+Added: If we are unable to sufficiently increase our customer rates to offset the increase in our costs, our profitability and cash flows could be materially affected.
+Added: In recent years, we have experienced lower freight volumes due to continued softness in the domestic economy.
+Added: Decreased demand for LTL freight services can negatively impact shipment volume and lower weight per shipment, which in turn can negatively impact freight density in our network.
+Added: Reduced freight density in our network can have a deleveraging impact on fixed costs, including depreciation and other indirect costs as a percent of revenue, which can adversely impact our profitability and cash flows.
Changes in our relationships with significant customers, including the loss or reduction in business from one or more of them, could have an adverse impact on our business.
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or (iii) claims exceed our coverage amounts.
−Removed: If claims exceed our self-insured retention or deductible levels, insurance companies exit the transportation insurance marketplace, or insurance market conditions change, insurers could raise premiums for excess coverage to cover their expenses and anticipated future losses.
+Added: If claims exceed our self-insured retention or deductible levels, insurance companies exit the
+Added: transportation insurance marketplace, or insurance market conditions change, insurers could raise premiums for excess coverage to cover their expenses and anticipated future losses.
Coverage also may not be procured or be unavailable for certain claims.
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In addition, the availability and price of our equipment may also be adversely affected in the future by regulations on newly manufactured equipment and engines.
−Removed: These regulations, the limited equipment availability, and other supply chain factors have resulted and could continue to result in higher prices for new equipment and related maintenance parts, which could have a material adverse effect on our business, financial
−Removed: condition, and results of operations, particularly our maintenance expense, depreciation expense, capital expenditures, mileage productivity, and driver retention.
−Removed: Various economic factors such as inflationary pressures or downturns in the domestic economy could adversely impact our profitability and cash flows.
−Removed: Inflationary pressures have been significant in the United States in recent years.
−Removed: Inflation impacts the cost to operate our business by putting upward pressure on wages, benefits, real estate, equipment, fuel, parts and repairs, insurance, and other general and miscellaneous expenses.
−Removed: If we are unable to sufficiently increase our customer rates to offset the increase in our costs, our profitability and cash flows could be materially affected.
−Removed: In 2023 and 2024, we experienced lower freight volumes due to continued softness in the domestic economy.
−Removed: Decreased demand for LTL freight services can negatively impact shipment volume and lower weight per shipment, which in turn can negatively impact freight density in our network.
−Removed: Reduced freight density in our network can have a deleveraging impact on fixed costs, including depreciation and other indirect costs as a percent of revenue, which can adversely impact our profitability and cash flows.
+Added: These regulations, the limited equipment availability, and other supply chain factors have resulted and could continue to result in higher prices for new equipment and related maintenance parts, which could have a material adverse effect on our business, financial condition, and results of operations, particularly our maintenance expense, depreciation expense, capital expenditures, mileage productivity, and driver retention.
Higher costs for or limited availability of suitable real estate may adversely affect our business operations.
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However, we also incur fuel costs that cannot be recovered even with respect to customers with which we maintain fuel surcharge programs, such as those costs associated with empty miles.
−Removed: 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, leading to fluctuations in our levels of reimbursement.
+Added: 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,
+Added: especially when prices are rising, leading to fluctuations in our levels of reimbursement.
We regularly monitor the components of our pricing, including fuel surcharges, and address individual account profitability issues with our customers when necessary;
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• some customers may choose to consolidate certain LTL shipments through a different mode of transportation, such as truckload, intermodal or rail;
−Removed: • some customers may perceive our environmental, social and governance (“ESG”) profile to be less robust than that of our competitors, which could influence the selection of their carrier;
+Added: • some customers may perceive our sustainability profile to be less robust than that of our competitors, which could influence the selection of their carrier;
• our customers may manage their inventory levels more closely to a “just-in-time” basis, which may increase our costs and adversely affect our ability to meet our customers’ needs;
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We may not be able to compete successfully in an increasingly consolidated LTL industry and cannot predict with certainty how industry consolidation will affect our competitors or us.
−Removed: Our customers’ and suppliers’ businesses may be impacted by various economic factors such as recessions, inflation, downturns in the economy, global uncertainty and instability, changes in U.S.
−Removed: social, political, and regulatory conditions and/or a disruption of financial markets, which may decrease demand for our services or increase our costs.
−Removed: Adverse macroeconomic conditions, both in the U.S.
−Removed: and internationally, such as high inflation, continued high interest rates and slower economic growth has, and may continue to, negatively affect our customers’ business levels, the amount of transportation services they need, their ability to pay for our services and overall freight levels, any of which might impair our asset utilization.
−Removed: Additionally, uncertainty and instability in the global economy or widespread outbreak of an illness or any other communicable disease or public health crisis, as we saw with the COVID-19 pandemic, may lead to fewer goods being transported and could have a material adverse effect on our business, financial condition and results of operations.
−Removed: government has taken certain other actions that have negatively impacted U.S.
+Added: Changes in international trade policies, including with respect to tariffs, may continue to adversely impact our customers, our industry and our business.
+Added: government has taken certain actions that have negatively impacted U.S.
trade, including imposing tariffs on certain goods imported into the United States, and several foreign governments have imposed tariffs on certain goods imported from the United States.
+Added: These changes in trade policy and tariffs have decreased demand for our services and have caused uncertainty and volatility in financial markets and may continue to adversely impact our customers, our industry and our business.
Any further changes in U.S.
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Such a reduction could have a material adverse effect on our business, results of operations and financial condition, as well as the price of our common stock.
−Removed: Customers adversely impacted by changes in U.S.
−Removed: trade policies or otherwise encountering adverse economic conditions, including as a result of current inflationary pressures, may be unable to obtain additional financing or financing under acceptable terms.
+Added: Our customers’ and suppliers’ businesses may be impacted by various economic factors such as recessions, inflation, downturns in the economy, global uncertainty and instability, changes in U.S.
+Added: social, political, and regulatory conditions and/or a disruption of financial markets, which may decrease demand for our services or increase our costs.
+Added: Adverse macroeconomic conditions, both in the U.S.
+Added: and internationally, such as high inflation, continued high interest rates and slower economic growth has, and may continue to, negatively affect our customers’ business levels, the amount of transportation services they need, their ability to pay for our services and overall freight levels, any of which might impair our asset utilization.
+Added: Additionally, uncertainty and instability in the global economy or widespread outbreak of an illness or any other communicable disease or public health crisis, as we saw with the COVID-19 pandemic, may lead to fewer goods being transported and could have a material adverse effect on our business, financial condition and results of operations.
+Added: Customers encountering adverse economic conditions, including as a result of current inflationary pressures, may be unable to obtain additional financing or financing under acceptable terms.
These customers represent a greater potential for bad debt losses, which may require us to increase our reserve for bad debt.
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Our suppliers’ business levels also may be negatively affected by adverse economic conditions and changes in the political and regulatory environment, both in the U.S.
−Removed: and internationally, or financial constraints, which could lead to disruptions in the workforce, supply and availability of equipment, parts and services critical to our operations.
+Added: and internationally, or financial constraints, which could lead to disruptions in the workforce,
+Added: supply and availability of equipment, parts and services critical to our operations.
A significant interruption in our normal supply chain could disrupt our operations, increase our costs and negatively impact our ability to serve our customers.
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However, from time to time there have been efforts to organize our employees at various service centers.
−Removed: Further, Congress or one or more states could approve legislation and/or the National Labor Relations Board could render decisions or implement rule changes that could significantly affect
−Removed: our business and our relationship with our employees, including actions that could substantially liberalize the procedures for union organization.
+Added: Further, Congress or one or more states could approve legislation and/or the National Labor Relations Board could render decisions or implement rule changes that could significantly affect our business and our relationship with our employees, including actions that could substantially liberalize the procedures for union organization.
In addition, we can offer no assurance that the Department of Labor will not adopt new regulations or interpret existing regulations in a manner that would favor the agenda of unions, or that our employees will not unionize in the future, particularly if continued regulatory changes facilitate unionization.
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It is critical that the data processed by these systems remains confidential, as it often includes competitive customer information, confidential customer payment and transaction information, employee records and key financial and operational results and statistics.
−Removed: The sophistication of efforts by hackers, foreign
−Removed: governments, cyber-terrorists, and cyber-criminals, acting individually or in coordinated groups, to launch distributed denial of service attacks or other coordinated attacks that may cause service outages, gain inappropriate or block legitimate access to systems or information, or result in other business interruptions has continued to increase.
+Added: The sophistication of efforts by hackers, foreign governments, cyber-terrorists, and cyber-criminals, acting individually or in coordinated groups, to launch distributed denial of service attacks or other coordinated attacks that may cause service outages, gain inappropriate or block legitimate access to systems or information, or result in other business interruptions has continued to increase.
We utilize third-party service providers who have access to our systems and certain sensitive data, which exposes us to additional security risks, particularly given the complex and evolving laws and regulations regarding privacy and data protection.
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Nevertheless, it is difficult to fully protect against the possibility of power loss, telecommunications failures, cyber-attacks, and other cyber incidents in every potential circumstance that may arise.
−Removed: The rapid ongoing evolution and increased adoption of emerging technologies such as artificial intelligence (“AI”) and machine learning may make it more difficult to anticipate and implement protective measures to recognize, detect, and prevent the occurrence of any of these events.
+Added: The rapid ongoing evolution and increased adoption of emerging technologies such as AI and machine learning may make it more difficult to anticipate and implement protective measures to recognize, detect, and prevent the occurrence of any of these events.
A significant cyber incident, including system failure, security breach, disruption by malware or ransomware, or other damage, could interrupt or delay our operations, damage our reputation and brand, cause a loss of customers, expose us to a risk of loss or litigation, result in regulatory scrutiny, investigations, actions, fines or penalties and/or cause us to incur significant time and expense to remedy such an event, any of which could have a material adverse impact on our results of operations and financial position.
Furthermore, we are subject to an increasing number of cybersecurity reporting obligations in different jurisdictions that vary in their scope and application, creating conflicting reporting requirements.
−Removed: These factors and the time spent to comply may inhibit our ability to quickly provide complete and reliable information about the cybersecurity incident to customers, counterparties, and regulators, as well as the public.
+Added: These factors and the time spent to investigate and evaluate the full impact of incidents and to comply may inhibit our ability to quickly provide complete and reliable information about the cybersecurity incident to customers, counterparties, and regulators, as well as the public.
Additionally, any failure to comply with data privacy, security or other laws and regulations, such as the California Consumer Privacy Act and other similar laws that have been or are expected to be enacted in the United States, at both the federal and state level, could result in claims, legal or regulatory proceedings, inquiries or investigations.
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Unauthorized access to data and other confidential or proprietary information may be obtained through break-ins, network breaches by unauthorized parties, employee theft or misuse, or other misconduct.
−Removed: If any of the foregoing were to occur or to be perceived to occur, our reputation may suffer, our competitive position may be diminished, we could face lawsuits, regulatory investigation, fines, and potential liability, and our financial results could be negatively impacted.
+Added: If any of the foregoing were to occur or to be perceived to occur, our reputation may suffer, our competitive position may be diminished, we could face lawsuits, regulatory investigations, fines, and potential liability, and our financial results could be negatively impacted.
Risks Related to Legal and Regulatory Matters
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however, the FAST Act does not restrict public disclosure of all data collected by the FMCSA.
−Removed: The FMCSA is currently reviewing CSA methodology to address deficiencies identified by the National Academy of Sciences, including the possibility of weak or negative correlation between current safety improvement categories and vehicle crash risk.
+Added: The FMCSA is currently refining CSA methodology to prioritize enforcement against high-risk motor carriers, provide specific information to assist motor carriers, identify sources of unsafe driver behavior and address vehicle maintenance issues.
Nevertheless, if we receive unacceptable CSA scores, and this data is made available to the public, our relationships with our customers could be damaged, which could result in a loss of business.
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Moreover, even without such regulation, increased awareness and any adverse publicity in the global marketplace about the greenhouse gases emitted by companies in the transportation industry could harm our reputation and reduce customer demand for our services.
−Removed: The engines in our newer tractors are subject to emissions-control regulations that could substantially increase operating expenses and future regulations concerning emissions or fuel-efficiency may have a material adverse impact on our business.
+Added: The engines in our newer tractors are subject to emissions-control regulations, and ongoing regulatory uncertainty regarding zero-emission vehicle mandates could substantially increase operating expenses and materially adversely impact our business.
In December 2022, the U.S.
−Removed: Environmental Protection Agency (“EPA”) finalized new stringent emission standards to reduce nitrogen oxides and establish new standards for greenhouse gas emissions from heavy-duty engines under the Clean Trucks Plan.
−Removed: In December 2021, the California Air Resources Board (“CARB”) adopted more stringent standards to reduce nitrogen oxide emissions from heavy-duty trucks.
−Removed: Although CARB recently withdrew its request for a waiver and authorization from the EPA for its Advanced Clean Fleets rule, a proposal that would have required trucking companies to gradually add zero emission vehicles (“ZEVs”) to their fleets, CARB may seek to enforce certain portions of the rule or curtail emissions through other programs.
−Removed: Furthermore, CARB’s Advanced Clean Trucks rule, a proposal that would require manufacturers to only sell ZEVs in California beginning in the 2036 model year, is still in effect.
+Added: Environmental Protection Agency (“EPA”) finalized stringent emission standards to reduce nitrogen oxides and establish new standards for greenhouse gas emissions from heavy-duty engines under the Clean Trucks Plan.
+Added: In December 2021, the California Air Resources Board (“CARB”) adopted more stringent standards to reduce nitrogen oxide emissions from heavy-duty trucks and approved the Advanced Clean Trucks (“ACT”) regulation, which would require manufacturers to sell zero-emission vehicles (“ZEVs”) as an increasing percentage of annual truck sales in California and other adopting states.
+Added: Uncertainty regarding the ACT and other emissions standards due to regulatory developments and related litigation, however, has resulted in varied application across jurisdictions, including delayed enforcement, executive orders pausing implementation, and legislative efforts to modify or repeal the requirements.
+Added: In addition, there are also virtually no ZEVs widely available that are suitable replacements for current technology used in our LTL operations.
+Added: If ZEV requirements are ultimately enforced and vehicles are not commercially available or viable for our LTL business, we may be required to modify or curtail our operations in California and other adopting states.
+Added: The potential transition to utilizing ZEVs, combined with the current regulatory uncertainty affecting long-term fleet planning and investment decisions, could have a material adverse effect on our financial condition, results of operations, and cash flows, or may require us to incur significant additional costs for vehicles, electric vehicle charging infrastructure, or other operational modifications.
Future strengthening of EPA, CARB, or other federal or state regulatory requirements regarding fuel-efficiency or engine emissions of tractors could also result in increases in the cost of capital equipment and maintenance.
−Removed: Expectations relating to evolving ESG considerations and related reporting obligations expose us to potential liabilities, increased costs, reputational harm, and other adverse effects on our business.
−Removed: Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on evolving ESG considerations relating to businesses, including climate change and greenhouse gas emissions, and human capital matters.
−Removed: In addition, we may make statements about our goals and initiatives through our various non-financial reports, information provided on our website, press statements and other communications.
−Removed: Responding to these ESG considerations and implementation of these goals and initiatives involves risks and uncertainties, may require investment, and depends in part on third-party performance, expectations, or data that is outside our control.
+Added: Varied stakeholder expectations relating to evolving sustainability considerations and related reporting obligations expose us to potential liabilities, increased costs, reputational harm, and other adverse effects on our business.
+Added: Various stakeholders, including governments, regulators, investors, employees, customers and others, have differing expectations about a wide range of evolving sustainability considerations relating to businesses, including climate change and greenhouse gas emissions, and human capital matters.
+Added: We make statements about our values, including the environmental and societal impact of our business, through our various non-financial reports, information provided on our website, press statements and other communications.
+Added: We also pursue sustainability and other goals and initiatives that involve risks and uncertainties, require investments, and depend in part on third-party performance or data that is outside of our control, and we may not be able to fully achieve all of our goals and initiatives.
+Added: Our efforts to advance our business and values, or achieve our goals and further our initiatives, or to align with stakeholders’ expectations, or comply with evolving, varied and at times conflicting federal and state laws, executive orders, regulations and standards, or any failure or perceived failure to do so, can result in adverse reactions by customers and other stakeholders, including the commencement of legal and regulatory proceedings against us, and can materially adversely affect our business, reputation, results of operations, financial condition and stock price.
Healthcare and other mandated benefits-related coverage may increase our costs for employee benefits and reduce our future profitability.
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however, dividend payments are subject to approval by our Board of Directors (the “Board”), and are restricted by applicable state law limitations on distributions to shareholders as well as certain covenants under our revolving credit facility and our note purchase and private shelf agreement.
−Removed: As a result, future dividend payments are not guaranteed and will depend upon various factors such as our overall financial
−Removed: condition, available liquidity, anticipated cash needs, future prospects for earnings and cash flows, as well as other factors considered relevant by our Board.
+Added: As a result, future dividend payments are not guaranteed and will depend upon various factors such as our overall financial condition, available liquidity, anticipated cash needs, future prospects for earnings and cash flows, as well as other factors considered relevant by our Board.
In addition, any reduction or suspension in our dividend payments could adversely affect the price of our common stock.
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• potential costs and liabilities associated with cyber incidents;
−Removed: • investor sentiment with respect to our policies or efforts on ESG matters;
+Added: • investor sentiment with respect to our policies or efforts on sustainability matters;
• widespread outbreak of an illness or any other communicable disease or public health crisis;
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We also use third parties to periodically benchmark and assess our cybersecurity readiness and to assess how any known vulnerabilities might impact our Company as well as the sufficiency of our response.
−Removed: The results generated from these activities are reported to management and are used to develop action plans to address any identified opportunities for risk mitigation and overall
+Added: The results generated from these activities are reported to management and are used to develop action plans to address any identified opportunities for risk mitigation and overall improvement.
The Risk Committee of our Board is apprised by management of the results of the third-party analysis, any related action plans, and progress against those plans.
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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.