What changed in this filing

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Item 1A. Risk Factors

2022-02-18 compared with 2021-02-19 · 86 added, 93 removed, 197 unchanged (48% of the section changed)

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The words “believe,” “expect,” “anticipate,” “project,” “estimate,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made.

In particular, information included under the sections entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain forward-looking statements.

Readers are cautioned that the matters discussed in these forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that are difficult to predict, and which could cause actual results to differ materially from those projected, anticipated, or implied in the forward-looking statements.

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Our operating results may be adversely affected by unfavorable economic and market conditions.

Our business and results of operations are sensitive to changes in overall economic conditions that impact customer shipping volumes, industry freight demand, industry truck capacity, and our operating costs.

Regarding our operating costs, inflationary pressures are occurring and are expected to persist in the near-term.

We cannot predict future economic conditions, fuel price fluctuations, revenue equipment resale values, or how consumer confidence could be affected by such conditions.

Economic conditions that decrease shipping demand, including but not limited to public health crises or outbreaks of infectious diseases, or increases in truck capacity in the North American transportation and logistics industry can exert downward pressure on rates and equipment utilization.

In general, a significant decline in shipping volumes within the industry or increases in available truck capacity results in more aggressive freight pricing as carriers compete for loads and to maintain truck productivity.

Economic conditions that decrease shipping demand, including but not limited to public health crises, outbreaks of infectious diseases, or increases in truck capacity in the North American transportation and logistics industry, can exert downward pressure on rates and equipment utilization.

In general, significant decreases in shipping volumes within the industry or increases in available truck capacity result in more aggressive freight pricing as carriers compete for loads and to maintain truck productivity.

Likewise, we are also subject to cost increases outside our control that could materially reduce our profitability if we are unable to offset such increases either through rate increases or cost reductions.

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Competition for the freight we transport or manage is based primarily on service, efficiency, available capacity, and to some degree, on freight rates alone.

In addition, some of our customers may use or expand their own private fleets rather than outsourcing loads to us.

In addition, some of our customers have, and others may in the future, use or expand their own private fleets rather than outsourcing loads to us.

Our operating segments compete with many other truckload carriers, logistics, brokerage, and transportation service providers of varying sizes, and to a lesser extent, LTL carriers, railroads, and other transportation or logistics companies, some of which have a larger fleet, greater access to equipment, preferential customer contracts, greater capital resources, or other competitive advantages.

Our competitors periodically reduce their freight rates to gain business, especially when economic conditions are present which negatively impact customer shipping volumes, truck capacities, or operating costs.

Moreover, to limit the number of approved carriers to a manageable number, some of our customers select “core carriers” as approved transportation service providers, and in some instances or periods of time, we may not be selected.

Other of our customers periodically accept bids from multiple carriers for their shipping needs, which also periodically results in the loss of business to competitors.

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O ur industry has experienced market entrance by well-resourced, non-traditional firms or startups who, in some cases, have undercut market prices via digital brokerage platforms to take market share in the fragmented North American transportation and logistics industry.

Our competitors, as well as new market entrants, may also introduce or adopt new brokerage platforms or technologies, which could increase competitive pressures.

Our existing competitors, as well as new market entrants, may also introduce or adopt new brokerage platforms or technologies, which could increase competitive pressures.

Although we believe we are well positioned and have adopted technologies, developed strategies, and heavily invested in our own digital service offerings to deter, compete with, or supplant existing competitors and new market entrants, there can be no assurance that our investments, technologies, or strategies will be successful.

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

We strive to maintain a diverse customer base however, a significant portion of our operating revenues is generated from a number of major customers, the loss of one or more of which could, in any given quarter, have a materially adverse effect on our business.

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

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

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Like many truckload carriers, we experience difficulty in attracting and retaining sufficient numbers of qualified drivers, both new and experienced, including owner-operators, and such shortages have and could continue to require us to significantly increase driver compensation, rely more on higher-cost third-party carriers, idle revenue equipment, or dispose of the equipment altogether, any of which could adversely affect our growth and profitability.

Our challenge with attracting and retaining qualified drivers is driven by several factors including intense market competition for a limited pool of qualified drivers, low starting and inconsistent driver pay, the preference among drivers to work closer to home and be home most nights, and our highly selective hiring standards.

Our challenge with attracting and retaining qualified drivers is driven by several factors including intense market competition for a limited pool of qualified drivers, inconsistent driver pay, the preference among drivers to work closer to home and be home most nights, and our highly selective hiring standards.

Our turnover rate requires us to continually recruit a substantial number of company and owner-operator drivers in order to meet customer demand.

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These increases could negatively affect our results of operations to the extent that we would be unable to obtain corresponding freight rate increases.

COVID-19 has adversely affected, and could continue to adversely affect, our operations, supply chains, and workforce, and we have experienced, and expect to continue to experience, volatility in freight volumes and demand for certain of our service offerings.

The spread of COVID-19 throughout the U.S.

has prompted state and local governments and businesses to take unprecedented measures in response.

Such measures have included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place orders.

COVID-19 has significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets.

There is continued uncertainty around the duration, breadth, and economic impacts of COVID-19.

Government and public health officials continue to recommend or mandate precautions to mitigate the spread of COVID-19, including prohibitions on congregating in large groups, the closing of businesses and operations to the extent such businesses or operations are not considered an essential service, and shelter-in-place orders or similar measures.

Consequently, our customers, suppliers, third-party business partners, and contractors continue to be disrupted in numerous ways, including worker absenteeism, quarantines and other restrictions on associates’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions.

The Company is continuing to monitor the situation and take appropriate actions in accordance with the recommendations and requirements of relevant authorities.

The full extent of the impact of COVID-19 on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic;

the development and availability of effective treatments and vaccines;

the potential for employee lawsuits for tort claims alleging that unsafe workplaces have caused employees to contract COVID-19, left them at heightened risk of exposure, or otherwise relating to the COVID-19 pandemic;

The global COVID-19 pandemic has adversely affected, and could continue to adversely affect, our operations, supply chains, and workforce, and we have experienced, and expect to continue to experience, volatility in freight volumes and demand for certain of our service offerings.

There is continued uncertainty around the duration, breadth, and economic impacts of the COVID-19 pandemic.

Government and public health officials continue to recommend or mandate precautions to mitigate its spread, including prohibitions on unvaccinated individuals congregating in large groups, mask mandates, and vaccination requirements to attend certain events or places of business.

The pandemic has significantly curtailed global economic activity and caused substantial volatility and disruption in global supply chains.

Consequently, we and our customers, suppliers, third-party business partners, and contractors may continue to experience business disruptions, including worker absenteeism and resignations, office and factory closures, disruptions to ports, shipping lanes, and other shipping infrastructure, border closures, or other travel or health-related restrictions.

Collectively, these disruptions could adversely impact our ability to operate efficiently.

The Company is continuing to monitor the progression of the pandemic and take appropriate actions in accordance with the recommendations and requirements of relevant authorities.

The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory, and duration of the pandemic;

potential employee lawsuits alleging that unsafe workplaces have caused employees to contract COVID-19, or otherwise relating to the pandemic;

the imposition of protective public safety measures;

and the impact of the pandemic on the global economy and demand for consumer products.

To the extent COVID-19 adversely affects the Company’s business, results of operations, financial condition, and stock price, it may also have the effect of heightening many of the other risks described throughout the “Risk Factors” section.

To date, the Company experienced a decrease in driver capacity which has reduced volume in varying degrees across its portfolio of services.

The mandated precautions to mitigate the spread of COVID-19 and other related disruptions have had, and may continue to have, an impact on the Company’s freight volumes, adversely affecting our revenues and earnings.

We experienced declines in freight volumes in our Truckload and Intermodal segments, certain of our customers closed portions of their operations and/or deferred decisions to award freight, and there was a decrease in the flow of new drivers entering the industry.

and the impact of the pandemic on the global economy and supply chain, and demand for consumer products.

To the extent the COVID-19 pandemic adversely affects the Company’s business, results of operations, financial condition, and stock price, it may also have the effect of heightening many of the other risks described throughout the “Risk Factors” section.

The mandated precautions to mitigate the spread of COVID-19 have had, and may continue to have, an impact on the Company’s freight volumes, affecting our revenues and earnings.

Additional future impacts on the Company (some of which have already occurred as described in this risk factor) may include, but are not limited to, material adverse effects on demand for the Company’s services, the Company’s supply chain and sales and distribution channels, the Company’s ability to execute its strategic plans, the Company’s ability to hire and retain drivers, and the Company’s profitability and cost structure.

Like other essential businesses, we continue to navigate the unprecedented challenge of remaining operational during a pandemic and are mindful of the liability risks of doing so.

To help alleviate some of the challenges our associates may be facing as a result of COVID-19, we have expanded our paid time off policy and are covering the cost of health insurance premiums in certain instances.

While no one can predict with any certainty the scale, length of disruption, or liabilities resulting from COVID-19, it is possible that our results of operations could continue to be negatively affected by the impact of the virus on the Company’s associates, customers, and suppliers or further governmental, regulatory, fiscal, and public health responses.

The COVID-19 outbreak and the resulting impact on our operating performance has also affected, and may continue to affect, the estimates and assumptions made by management.

Such estimates and assumptions include among other things, the Company’s goodwill, long-lived, and held for sale asset valuations;

current expected credit losses;

healthcare reserves;

and measurement of compensation cost for certain share-based awards and annual incentive plans.

We are unable to predict any future impacts of COVID-19 on our business, financial condition, and results of operations at this time.

We have transitioned a significant subset of our employee population to remote work environments in an effort to mitigate the spread of COVID-19 which may exacerbate the cybersecurity risks to our business, including an increased demand for information technology resources, increased risk of phishing, and other cybersecurity attacks.

In response to COVID-19, we have been temporarily allowing a significant portion of our workforce which can work from home to work from home and have provided associates with expanded remote network access options which enable them to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes the Company to additional cybersecurity risks.

The United States Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”) has warned that cybercriminals will take advantage of the uncertainty created by COVID-19 and federal and state mandated quarantines to launch attacks which will further disrupt operations.

While no one can predict with any certainty the scale, length of disruption, or liabilities resulting from the COVID-19 pandemic, it is possible that our results of operations could be negatively affected by the impact of the virus on the Company’s associates, customers, and suppliers or further governmental, regulatory, fiscal, and public health responses.

We are unable to predict any future impacts of the COVID-19 pandemic on our business, financial condition, and results of operations at this time.

A subset of our employee population works remotely (prompted by the COVID-19 pandemic) which may exacerbate the cybersecurity risks to our business, including an increased demand for information technology resources, increased risk of phishing, and other cybersecurity attacks.

We have, and will continue to have, a portion of our workforce that works from home full-time or under flexible work arrangements, and we have provided associates with expanded remote network access options which enable them to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes the Company to additional cybersecurity risks.

The United States Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”) has warned that cybercriminals will take advantage of the uncertainty created by the COVID-19 pandemic to launch attacks which will further disrupt operations.

Specifically, our associates working remotely expose the Company to cybersecurity risks in the following ways:

(1) unauthorized access to sensitive information as a result of increased remote access, including associates use of company-owned and personal devices and videoconferencing functions and applications to remotely handle, access, discuss, or transmit confidential financial data, (2) increased exposure to phishing and other scams as cybercriminals use the fear and uncertainty surrounding the international COVID-19 outbreak to further manipulate associates through phishing schemes to, among other things, install malicious software on Company systems and equipment and surrender sensitive information, and (3) violation of international, federal, or state-specific privacy laws.

We believe that the increased number of associates working remotely as a result of the COVID-19 outbreak has incrementally increased our cyber risk profile, but we are unable to predict the extent or impacts of those risks at this time.

(1) unauthorized access to sensitive information as a result of increased remote access, including associates use of company-owned and personal devices and videoconferencing functions and applications to remotely handle, access, discuss, or transmit confidential financial data, (2) increased exposure to phishing and other scams as cybercriminals use the fear and uncertainty surrounding the COVID-19 pandemic to further manipulate associates through phishing schemes to, among other things, install malicious software on Company systems and equipment and surrender sensitive information, and (3) violation of international, federal, or state-specific privacy laws.

We believe that the increased number of associates working remotely as a result of the COVID-19 pandemic has incrementally increased our cyber risk profile, but we are unable to predict the extent or impacts of those risks at this time.

A significant disruption of our information technology systems, unauthorized access to or loss of confidential information, or legal claims resulting from our violation of privacy laws could each have a material adverse effect on our business.

The success of our businesses depends on our strong reputation and our ability to maintain the value of the Schneider brand.

Because the services that we market and sell under the Schneider brand generate essentially all of the Company’s net revenues, the Schneider brand name is our most valuable sales and marketing tool.

Press coverage, lawsuits, regulatory investigations, or other adverse publicity that assert some form of wrongdoing or that depict the Company or any of our executives, associates, contractors, or agents in a negative light, regardless of the factual basis for the assertions being made, could tarnish our reputation and result in a loss of brand equity.

The success of our businesses depends on our strong reputation and ability to maintain the Schneider brand value.

Because the services that we market and sell under the Schneider brand generate essentially all of the Company’s revenues, the Schneider brand name is our most valuable sales and marketing tool.

Press coverage, lawsuits, regulatory investigations, or other adverse publicity that assert some form of wrongdoing or that depict the Company or any of our executives, associates, contractors, or agents in a negative light, regardless of the factual basis of the assertions being made, could tarnish our reputation and result in a loss of brand equity.

If we do not maintain and protect our brand image and reputation, demand for our services could wane and thus have an adverse effect on our financial condition, liquidity, and results of operations, as well as require additional resources to rebuild our reputation and restore the value of our brand.

If fuel prices increase significantly, our results of operations could be adversely affected.

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

If fuel prices rise or fall significantly, our results of operations could be adversely affected.

Likewise, if diesel fuel prices decrease significantly, the results of our intermodal operations could be adversely affected as shippers shift intermodal freight to over the road trucking.

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

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The majority of these services are provided pursuant to contractual relationships with the railroads.

While we have

had agreements with all of the Class I railroads, currently, our primary contracts are with the BNSF Railway Company (“BNSF”) and CSX Transportation (“CSX”) freight railroads to provide rail-based freight transportation services in support of our intermodal operations.

One of our competitors has a preferential contractual arrangement with BNSF, which limits the market share and relative profitability of the services we provide through BNSF.

While we have had agreements with all of the Class I railroads, our primary contracts are currently with the BNSF and CSX Transportation (“CSX”) freight railroads to provide rail-based freight transportation services in support of our intermodal operations.

One of our competitors has a preferential contractual arrangement with BNSF, which limits the market share and relative profitability of the services we provide through the BNSF.

Beginning in 2023, UP will replace BNSF as our primary rail service provider in the western U.S.

The transition to UP and away from BNSF will be complete by January 2023.

The transition will require cooperation and coordination by Schneider with both BNSF and UP to be successful and to ensure no interruptions in our intermodal service results.

Our results of operations could be adversely affected by any extended interruption of our intermodal service offering due to this transition or UP's ability to manage our rail volumes following the transition.

In certain markets and rail corridors, rail service is limited to a few railroads or even a single railroad due to the lack of competition.

Our ability to provide intermodal services in certain traffic lanes is likely to be reduced or constricted if any of the Class 1 railroads were to discontinue service in those lanes or if the overall state of rail service in those lanes were to deteriorate.

Our ability to provide intermodal services in certain traffic lanes is likely to be reduced or constricted if any of the Class I railroads were to discontinue service in those lanes or if the overall state of rail service in those lanes were to deteriorate.

Our contracts with the railroads are subject to periodic renewal, and our intermodal business may be adversely affected by any adverse change in our contract terms with the railroads, our relationships with the railroads, or declines in service and volume levels provided by the railroads.

In addition, a portion of the freight we deliver through both our Intermodal and Trucking segments is imported to the U.S.

through ports of call that are subject to labor union contracts.

Work stoppages or other disruptions at any of these ports could have a materially adverse effect on our business.

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

Our Logistics segment is highly dependent on the services of third-party capacity providers, such as other truckload carriers, LTL carriers, railroads, ocean carriers, and airlines.

Many of those providers face the same economic challenges as we do and, therefore, are actively and competitively soliciting business.

These economic conditions may have an adverse effect on the performance, availability, and cost of third-party capacity.

If we are unable to secure the services of these third-party capacity providers at reasonable rates, our results of operations could be adversely affected.

In addition, a portion of the freight we deliver through both our Intermodal and Truckload segments is imported to the U.S.

through ports of call where workers are largely unionized, and which recently have been, subject to COVID-induced congestion, backlogs, and unloading delays.

The ILWU is a labor union which primarily represents dock workers on the West Coast of the U.S.

The ILWU’s current coast wide contract with west coast port owners is scheduled to expire on July 1, 2022.

In the previous four contract negotiations between the ILWU and port owners dating back to the late 1990s, negotiations went past the July 1 deadline, and in those contract years, work slowdowns or an employer lockout ensued.

Work stoppages, shipping backlogs, port congestion, or other disruptions at any of these ports could have a materially adverse effect on our business.

The valuation of the Company’s investments in strategic partners and technologies is subject to volatility.

The market valuation of our strategic investments, especially as it relates to our investment in TuSimple which is publicly traded, may experience substantial price volatility which, when accounted for under GAAP, could have a material adverse affect on the Company’s financial condition and results of operations.

Refer to Note 5, Investments , to our consolidated financial statements for information on our strategic investments.

Those investments can be negatively affected by market and economic factors including liquidity, credit deterioration, financial results, interest rate fluctuations, or other factors.

As a result, future fluctuations in their value could result in significant losses and could have a material adverse impact on the Company’s financial condition and results of operations.

We are making strategic investments in new offerings and technologies and expect to continue to make such investments in the future.

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If our strategic investments fail to meet our expectations, our business and results of operations may be adversely impacted.

If we cannot effectively manage the challenges associated with doing business internationally, our revenues and profitability may suffer.

Our results are affected by the success of our operations in Mexico, Canada, and China.

We are subject to risks of doing business in those countries, including fluctuations in foreign exchange rates and currency controls, local economic and political conditions, restrictive trade policies, imposition of foreign duties and taxes, U.S.

and foreign anti-corruption laws, U.S.

and foreign trade policies, difficulties in enforcing contractual obligations and intellectual property rights, burdens of complying with a wide variety of international and U.S.

export and import laws, and social, political, and economic instability.

Additional risks associated with our foreign operations include restrictive trade policies and imposition of duties, taxes, or government royalties by the governments of Mexico and Canada.

On July 1, 2020, the new USMCA entered into force as a replacement to the NAFTA.

The USMCA contains significant improvements and modernized approaches to rules of origin, agricultural market access, intellectual property, digital trade, labor, and numerous other sectors.

It is difficult to anticipate the full impact of the USMCA on our business, financial condition, cash flows, and results of operations.

In addition, if we are unable to maintain our Customs Trade Partner Against Terrorism, Free and Secure Trade, and Partners in Protection status, we may have significant border delays.

This could cause our Mexican and Canadian operations to be less efficient than those of our competitors.

Our Logistics segment is highly dependent on the services of third-party capacity providers, such as other truckload carriers, LTL carriers, railroads, ocean carriers, and airlines.

Many of those providers face the same economic challenges as we do and, therefore, are actively and competitively soliciting business.

These economic conditions may have an adverse effect on the performance, availability, and cost of third-party capacity.

If we are unable to secure the services of these third-party capacity providers at reasonable rates, our results of operations could be adversely affected.

Severe weather and similar events could harm our results of operations or make our results more volatile.

From time to time, we may suffer impacts from severe weather and similar events, such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes, and explosions.

These events may disrupt freight shipments or routes, affect regional economies, destroy our assets, disrupt fuel supplies, increase fuel costs, cause lost revenue and productivity, increase our

maintenance costs, or adversely affect the business or financial condition of our customers, any of which could harm our results of operations or make our results of operations more volatile.

From time to time, we may suffer impacts from severe weather and similar events, such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes, and explosions, which may become more severe in the future as a result of climate change.

These events may disrupt freight shipments or routes, affect regional economies, destroy our assets, disrupt fuel supplies, increase fuel costs, cause lost revenue and productivity, increase our maintenance costs, or adversely affect the business or financial condition of our customers, any of which could harm our results of operations or make our results of operations more volatile.

Risks Relating to Our Financial Condition, Taxation, and Capital Requirements

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We hold significant amounts of goodwill and long-lived assets, and the balances of these assets could increase in the future if we acquire other businesses.

At December 31, 2020, the balance of our goodwill, capitalized software, and long-lived assets was $2.0 billion, and the total market value of the Company’s outstanding shares was $3.7 billion.

At December 31, 2021, the balance of our goodwill, internal use software, and long-lived assets was $2.4 billion, and the total market value of the Company’s outstanding shares was $4.8 billion.

Under GAAP, our goodwill and long-lived assets are subject to an impairment analysis when events or changes in circumstances indicate the carrying value of such goodwill or long-lived assets may not be recoverable.

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

Recently, the amount and timing of capital expenditures also has been affected by delayed truck deliveries by original equipment manufacturers due to semiconductor and other component shortages.

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

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

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

During periods of decreased customer demand, our asset

utilization may suffer, and we may be forced to sell equipment on the open market in order to rightsize our fleet.

This could cause us to incur losses on such sales, particularly during times of a softer used equipment market, either of which could have a materially adverse effect on our profitability.

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Our effective tax rate may fluctuate which would impact our future financial results.

Our effective tax rate may be adversely impacted by, among other things, changes in the valuation of deferred tax assets, changes in the regulations relating to capital expenditure deductions, or changes in tax laws where we operate, including the uncertainty of future tax rates.

Our effective tax rate may be adversely impacted by, among other things, changes in the regulations relating to capital expenditure deductions, or changes in tax laws where we operate, including the uncertainty of future tax rates.

We cannot give any assurance as to the stability or predictability of our effective tax rate in the future because of, among other things, uncertainty regarding the tax laws and policies of the countries where we operate.

The estimated effects of applicable tax laws, including current interpretation of the Tax Reform Act and recently proposed regulations thereto, have been incorporated into our financial results.

Treasury Department, Internal Revenue Service, and other standard-setting bodies could interpret or issue future legislation or guidance which impact how provisions of the Tax Reform Act will be applied or otherwise administered that is different from our interpretation, which could have a material adverse impact on our effective tax rate, as well as our future financial results and tax payments.

Although we do not expect current U.S.

federal income tax proposals (including, for example, those included in President Biden’s Build Back Better Act released at the end of October 2021) to have a material impact on our effective tax rate or tax payments, we cannot predict what changes to U.S.

federal income tax law may be proposed in the future or whether they are likely to be passed.

In addition, while our review of the corporate tax proposals introduced in the draft legislation did not indicate that any such proposals would have an impact on Schneider’s effective tax rate or tax payments, we cannot predict what legislation may be proposed in the future or its likelihood of passing.

Our estimates of the impact of any proposed legislation may not reflect the actual impact of such legislation once it is implemented and enforced by governmental authorities.

Further, our tax returns are subject to periodic reviews or audits by domestic and international authorities, and these audits may result in adjustments to our provision for taxes or allocations of income or deductions that result in tax assessments different from amounts that we have estimated.

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As a result, we qualify as a “controlled company” under the corporate governance rules for NYSE-listed companies.

As a controlled company, certain exemptions under the NYSE listing standards exempt us from the obligation to comply with certain NYSE corporate governance

requirements, including the requirement that we have a Corporate Governance Committee that is composed entirely of independent directors.

As a controlled company, certain exemptions under the NYSE listing standards exempt us from the obligation to comply with certain NYSE corporate governance requirements, including the requirement that we have a Corporate Governance Committee that is composed entirely of independent directors.

We have elected to take advantage of this “controlled company” exemption, and therefore the holders of our Class B common stock may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance rules for NYSE-listed companies.

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• a dual class common stock structure, which provides the Schneider National, Inc.

Voting Trust with the ability to control the outcome of matters requiring shareholder approval, even if the Schneider National, Inc.

Voting Trust the ability to control the outcome of matters requiring shareholder approval, even if the Schneider National, Inc.

Voting Trust beneficially owns significantly less than a majority of the shares of our outstanding Class A and Class B common stock;

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Our status as a Wisconsin corporation and the anti-takeover provisions of the WBCL may discourage, delay, or prevent a change in control even if a change in control would be beneficial to our shareholders by prohibiting us from engaging in a business combination with any person that is the beneficial owner of at least 10% of the voting power of our outstanding voting stock (an “interested shareholder”) for a period of three years after such person becomes an interested shareholder, unless our Board has approved, before the date on which the shareholder acquired the shares, that a business combination or the purchase of stock made by such interested stockholder on such stock acquisition date.

In addition, we may engage in a business

combination with an interested shareholder after the expiration of the three-year period with respect to that shareholder only if one or more of the following conditions is satisfied:

In addition, we may engage in a business combination with an interested shareholder after the expiration of the three-year period with respect to that shareholder only if one or more of the following conditions is satisfied:

(1) our Board approved the acquisition of the stock before the date on which the shareholder acquired the shares, (2) the business combination is approved by a majority of our outstanding voting stock not beneficially owned by the interested shareholder, or (3) the consideration to be received by shareholders meets certain fair price requirements of the WBCL with respect to form and amount.

These provisions could have the effect of discouraging, delaying, or preventing a transaction involving a change in control of our company.

These provisions could also have the effect of discouraging proxy contests and make it more difficult for our non-controlling shareholders to elect directors of their choosing and cause us to take other corporate actions.

These provisions could also have the effect of discouraging proxy contests and making it more difficult for our non-controlling shareholders to elect directors of their choosing, causing us to take other corporate actions.

In light of present circumstances, we believe these provisions taken as a whole protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal.

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We may change our dividend policy at any time.

The declaration and amount of any future dividends, including the payment of special dividends, is subject to the discretion of our Board and is not assured.

The declaration and amount of any future dividends, including the payment of special dividends, is dependent on multiple factors including our financial performance and capital needs and is subject to the discretion of our Board.

The Board may, in its discretion, determine to cut, cancel, or eliminate our dividend and, therefore, the declaration of any dividend, at any frequency, as it is not assured.

Each quarter, the Board considers whether the declaration of a dividend is in the best interest of our shareholders and in compliance with applicable laws and agreements.

Although we expect to continue to pay dividends to holders of our Class A and Class B common stock, we have no obligation to do so, and our dividend policy may change at any time without notice.

Future dividends may also be affected by factors that our Board deem relevant, including our potential future capital requirements for investments, legal risks, changes in federal and state income tax laws, or corporate laws and contractual restrictions such as financial or operating covenants in our debt arrangements.

Future dividends may also be affected by factors that our Board deems relevant, including our potential future capital requirements for investments, legal risks, changes in federal and state income tax laws, or corporate laws and contractual restrictions such as financial or operating covenants in our debt arrangements.

As a result, we may not pay dividends at any rate or at all.

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Some state governments and federal and state regulatory authorities, as well as independent contractors themselves, have asserted that independent contractor drivers in the trucking industry, such as those operating under our owner-operator model, are employees rather than independent contractors for a variety of purposes, including income tax withholding, workers’ compensation, wage and hour compensation, unemployment, and other issues.

Some states have enacted, or are considering, new laws to make it harder to classify a worker as independent contractors and easier for tax and other authorities to reclassify independent contractors as employees.

Some states have enacted, or are considering, new laws to make it harder to classify worker as independent contractors and easier for tax and other authorities to reclassify independent contractors as employees.

Additionally, federal legislators, among other things, have sought to abolish a safe harbor which allows taxpayers meeting certain criteria to treat individuals as independent contractors if they are following a long-standing, recognized practice and extend the FLSA which establishes minimum wage, overtime pay, recordkeeping, and other employment standards affecting employees in the private sector and in federal, state, and local governments, to independent contractors.

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As a result, we are, from time to time, party to administrative proceedings and litigation, including class actions, alleging violations of the FLSA and other state and federal laws which seek retroactive reclassification of certain current and former independent contractors as employees.

An adverse decision in such legal proceedings in an amount that materially exceeds our reserves or, federal or state legislation in this area which render the owner-operator model either impractical or extinct thereby curtailing our revenue opportunities, could have an adverse effect our results of operations and profitability.

We operate in a regulated industry, and increased direct and indirect costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

In the U.S., the DOT, FMCSA, and various state agencies exercise broad powers over our business, generally governing matters including authorization to engage in motor carrier service, equipment operation, safety, financial reporting, and leasing arrangements with independent contractors.

We are audited periodically by the DOT to ensure that we are in compliance with

various safety, HOS, and other rules and regulations.

We are audited periodically by the DOT to ensure that we are in compliance with various safety, HOS, and other rules and regulations.

If we were found to be out of compliance, the DOT could restrict or otherwise impact our operations.

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and achieve operating efficiencies and growth.

Such data and information remain vulnerable to cyber-attacks, cyber security breaches, theft, or other unauthorized disclosure which, if successful, could result in the disclosure of confidential customer or commercial data, loss of valuable intellectual property, or system disruptions and subject us to civil liability and fines or penalties, damage our brand and reputation, or otherwise harm our business, any of which could be material.

Such data and information remain vulnerable to cyber-attacks, cybersecurity breaches, ransomware attacks, hackers, theft, or other unauthorized disclosure which, if successful, could result in the disclosure of confidential customer or commercial data, loss of valuable intellectual property, or system disruptions and subject us to civil liability and fines or penalties, damage our brand and reputation, or otherwise harm our business, any of which could be material.

In addition, delayed sales, lower margins, or lost customers resulting from security breaches or network disruptions could materially reduce our revenues, materially increase our expenses, damage our reputation, and have a material adverse effect on our stock price.

Our information technology systems may also be susceptible to interruptions or failures for a variety of reasons including software failure, user error, power outages, natural disasters, cyber-attacks, terrorist attacks, computer viruses, hackers, or other security breaches.

A significant disruption or failure in our information technology systems could have a material adverse effect on our business, which could include operational disruptions, loss of confidential information, external reporting delays or errors, legal claims, or damage to our business reputation.

Our information technology systems may also be susceptible to interruptions or failures for a variety of reasons including software or hardware failure, user error, power outages, natural disasters, computer viruses, or other types of interruptions.

For example, in February 2022 we experienced a firmware defect (which was not related to a cyber event and did not involve a breach of data) relating to a third-party vendor’s equipment that interrupted the functioning of our computer systems and disrupted our operations.

As a result of this incident, we were required to rely on manual operations to book freight, execute loads and pay carriers for two business days and otherwise execute our business continuity plans.

While this disruption resulted in lost revenue and operating profit, it is not expected to have a material impact on our annual results of operations.

However, a significant disruption or failure in our information technology systems could have a material adverse effect on our business, including operational disruptions, loss of confidential information, external reporting delays or errors, legal claims, or damage to our business reputation.

Our success depends on our ability to attract and retain key employees, and if we are unable to attract and retain such qualified employees, our business and our ability to execute our business strategies may be materially impaired.

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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