What changed in this filing

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Item 1A. Risk Factors

2025-02-21 compared with 2024-02-23 · 83 added, 103 removed, 263 unchanged (41% of the section changed)

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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.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will be achieved or accomplished.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will be achieved or accomplished.

Many factors that could cause actual results or events to differ materially from those anticipated include those matters described under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K, and we do not assume any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required by applicable law.

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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, inflation, and our operating costs.

Regarding our operating costs, inflationary pressures persist but are generally expected to decline or stabilize in the U.S.

in the near-term due to the stabilization of the recent imbalance between supply and demand for goods and services in the economy.

We cannot predict future economic conditions, fuel price fluctuations, transportation 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, outbreaks of infectious diseases, or excess 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 truck productivity.

Our business and results of operations are sensitive to changes in overall economic conditions, public health crises, tariffs, and other geopolitical issues that impact customer shipping volumes, industry freight demand, industry truck capacity, inflation, and our operating costs.

Announced import tariffs on certain imported goods by the Trump administration have led to the threat or imposition of reciprocal tariffs by several foreign governments on certain goods imported from the U.S.

The imposition of additional tariffs or quotas or changes to certain trade agreements, could, among other things, negatively impact customer demand or increase our operating costs.

Economic conditions, tariffs, or other issues that decrease shipping demand can exert downward pressure on rates and equipment utilization or increase the cost of our equipment, fuel, and other operating costs.

We cannot predict future economic conditions, whether proposed or threatened tariffs will be enacted, or how consumer demand, purchasing cycles, or our input costs could be affected by such conditions.

In general, significant decreases in shipping volumes within the industry or increases in available truck capacity could result in more aggressive freight pricing as carriers compete for loads and 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 through rate increases or cost reductions.

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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.

Some of our customers have, and others may in the future, used or expanded their own private fleets rather than outsource loads to us.

Further, our industry has experienced market entrance by well-resourced, non-traditional firms or startups who, in some cases, have undercut market prices to capture market share.

Some of our customers have used or expanded their own private fleets rather than outsource loads to us, and others may do so in the future.

Finally, our existing competitors, as well as new market entrants, have and continue to introduce new brokerage platforms or technologies, which has increased competition.

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Our turnover rate requires us to continually recruit a substantial number of company and owner-operator drivers to support our operations.

Owner-operator availability is generally affected by operating cost increases (which the owner-operator is responsible for) and economic conditions, which drive overall increases in customer demand, and heightened competition for owner-operators from other carriers.

Owner-operator availability is generally affected by operating cost increases for which the owner-operator is responsible.

Economic conditions drive overall increases in customer demand and heightened competition for owner-operators from other carriers.

When shortages of owner-operators occur, we may have to increase settlement rates paid to them and increase company driver pay rates to attract and retain a sufficient number of drivers.

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

We recently completed the deployment of a new ERP system, and challenges with the system may adversely impact our business and operations.

In May 2023, we began the implementation of a new ERP system, which was completed in December, to support and streamline our core financial systems.

This implementation required the integration of the new system with multiple new and existing information systems and business processes.

The new ERP system is designed to increase the efficiency and accuracy of data by streamlining data sources, simplifying complex processes, and reducing manual processes.

Any remaining open disruptions, deficiencies, or other problems associated with the implementation of our ERP system, such as quality issues, programming errors, or any cost increases could adversely affect our ability to operate our business, produce timely and accurate financial statements, or comply with applicable regulations.

This could result in negative impacts on our business, operations, and stock price or could subject us to potential liability or investigation by regulatory authorities.

Additionally, the new ERP system involves greater utilization of third-party cloud computing services in connection with our business operations.

Problems faced by us or our third-party providers, including technological or business-related disruptions and cybersecurity threats, could adversely impact our business, results of operations, and financial condition for future periods.

Any failures identified within our internal controls as a result of this implementation, even if quickly remediated, or remaining difficulties encountered, may adversely impact our operating results or hinder our ability to report our financial results in a timely and accurate basis.

We face risks associated with unionization.

Although the number of our associates who are currently represented by a labor union is not significant, we face ongoing risks associated with the potential unionization of certain of our associates.

Although the number of our associates who are currently represented by a labor union is not significant, we face ongoing risks associated with the potential unionization of certain associates.

Over the last several years we have been the subject of isolated unionization efforts involving a relatively small number of associates, which efforts were, in each case, unsuccessful.

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These responses could also expose us to legal risk or reputational harm and cause us to incur costs to defend legal and regulatory actions.

Moreover, any labor disputes or work stoppages, whether or not our other associates unionize, could disrupt our operations and reduce our revenues.

A subset of our employee population works remotely 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.

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 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 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.

Moreover, any labor disputes or work stoppages, whether or not such actions culminate in a successful unionization campaign, could disrupt our operations and have a material adverse effect on our financial results.

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

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

Our truckload operations are largely dependent on diesel fuel, and accordingly, significant increases in diesel fuel costs could materially and adversely affect our truckload operations, and if we are unable to pass increased costs on to customers through rate increases or fuel surcharges or if shippers opt for intermodal rail over trucking their freight, our results of operations and

financial condition 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.

Our fuel surcharge program does not protect us against the full effect of increases in diesel fuel prices, and the terms of our fuel surcharge agreements vary by customer.

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

As of December 31, 2023, we did not have any derivative financial instruments to reduce our exposure to fuel price fluctuations.

During 2024, we did not enter into any derivative financial instruments that served to hedge or reduce our exposure to fuel price fluctuations.

We depend on railroads and access to the nation’s ports of call in the operation of our intermodal business, and therefore, our ability to offer intermodal services or our results of operations could be adversely impacted if our rail partners or certain ports of call were to perform poorly or experience service disruptions.

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The majority of these services are provided pursuant to contracts with our service partners which are subject to periodic renewal.

While we have had agreements with all of the Class I railroads, our primary contracts for railroad transportation in support of our intermodal operations are currently with CSX Transportation, the Union Pacific Railroad Company, and the Canadian Pacific Kansas City Railroad.

In certain areas of the U.S., rail service is limited to a few railroads, or even a single railroad due to the lack of competition.

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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 represented by the ILWU, a labor union which primarily represents a significant number of longshore workers at 29 ports across the West Coast, or the International Longshoremen’s Association, the largest union of maritime workers in North America, which represents a larger number of longshoremen on the Atlantic and Gulf Coasts, Great Lakes, major U.S.

through ports of call where workers are represented by the ILWU, a labor union which primarily represents a significant number of longshore workers at 29 ports across the West Coast, or the ILA, the largest union of maritime workers in North America, which represents a larger number of longshoremen on the Atlantic and Gulf Coasts, Great Lakes, major U.S.

rivers, Puerto Rico, and Eastern Canada.

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and have a long history of labor and other port disputes, protracted collective bargaining, and contract negotiations which, in the past, have involved port disputes and closures, as well as threats of a strike that would have disrupted domestic supply chains.

Although, as of the date of this Annual Report on Form 10-K, there have been no reports or signs of labor strife at the ports on either coast, there can be no guarantee that work stoppages or other disruptions at the west or east coast ports will not occur.

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

These ventures are inherently risky and subject to volatility, and we may never realize any expected benefits from them which could have a material adverse effect on our business and financial results.

We engage in strategic transactions and continue to make strategic investments including investments in new technologies and potentially disruptive startup companies which are focused on establishing a competitive advantage in the transportation and logistics services offered by the Company or exploiting new market opportunities including autonomous vehicle technologies, TMS software platforms, telematics, and mobile software applications.

Such strategic investments naturally entail risks and uncertainties, some of which are beyond our control.

For example, we may not be able to derive value from strategic

investments, or we may incur higher than expected costs in realizing a return on such investments or overestimate the benefits that we receive or realize from such investments.

For example, the ILA went on strike for three days in October 2024 following disputes with the USMX regarding pay and job security in connection with the negotiation of a new master contract.

The strike ended when ILA and USMX agreed to a short-term extension of their existing master contract.

In January 2025, the ILA again threatened to strike when the previous master contract extension expired on January 15, 2025, although this strike was avoided when the ILA and USMX agreed to a new six-year master contract.

There can be no guarantee that work stoppages or further disruptions at the west or east coast ports will not occur.

Our strategic investments in technology companies and strategic partners are inherently risky, and the valuation of these investments is subject to volatility which could result in a significant charge to earnings.

We engage in strategic transactions and continue to make strategic investments, including investments in new technologies and potentially disruptive startup companies, which are focused on establishing a competitive advantage in transportation and logistics services offered by the Company or exploiting new market opportunities.

Such strategic investments naturally entail risks and uncertainties, some of which are beyond our control and, as a result, the market valuation of any of our strategic investments may experience substantial price volatility which, when accounted for under GAAP, in any given period, could adversely impact the Company’s results of operations.

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

In addition, we may not be able to derive value from strategic investments, or we may incur higher than expected costs in realizing a return on such investments or overestimate the benefits that we receive or realize from such investments.

Therefore, we cannot provide assurance that any of our strategic investments will generate anticipated financial returns.

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

The market valuation of our strategic investments may experience substantial price volatility which, when accounted for under GAAP, could have a material adverse effect 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 have a material adverse impact on the Company’s financial condition and results of operations.

We may be unsuccessful in realizing all or any part of the anticipated benefits of any recent or future acquisitions within the expected time period or at all.

The cost, integration, and performance of any such acquisition may adversely affect our business, results of operations, financial condition, and cash flows.

As part of our strategy to grow and expand our service offerings and create shareholder value, we have actively been engaged in identifying acquisition targets which meet our acquisition criteria and recently consummated several acquisitions in this regard.

We may be unable to generate sufficient revenue or earnings from these acquisitions, or any future acquired business, to offset our acquisition or investment costs, and the acquired business may otherwise fail to meet our operational or strategic expectations.

Difficulties encountered in integrating acquired operations could prevent us from realizing the full anticipated benefits, within the anticipated timeframe, and could adversely impact our business, results of operations, and financial condition.

The possible risks involved in recent or future acquisitions include, among others:

• difficulties integrating operations of the companies, including the integration of the workforces, while continuing to provide consistent, high-quality service to customers;

• unanticipated issues in the assimilation and consolidation of information technology, communications, and other systems, including additional systems training and other labor inefficiencies;

• potentially unfavorable pre-existing contractual relationships;

• delays in consolidation of corporate and administrative infrastructures;

• inability to apply and maintain our internal controls and compliance with regulatory requirements;

• other unanticipated issues, expenses, and liabilities, including previously unknown liabilities associated with the acquired business for which we have no, or are unable to secure, recourse under applicable indemnification or insurance provisions.

We continue to evaluate acquisition candidates and may acquire assets and businesses that we believe complement our existing assets and business or enhance our service offerings.

The complex and time-consuming processes of evaluating acquisitions and performing due diligence procedures include risks that may adversely impact the success of our selection of candidates, pricing of the transaction, and ability to integrate critical functional areas of the acquired business.

Future acquisitions, if any, may require substantial capital or the incurrence of substantial indebtedness or may involve the dilutive issuance of equity securities, which may negatively impact our capitalization and financial position.

Further, we may not be able to acquire any additional companies at all or on terms favorable to us, even though we may have incurred expenses in evaluating and pursuing strategic transactions.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under our Receivables Purchase Agreement and our revolving credit facility are at variable rates of interest and expose us to interest rate risk.

If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same.

Borrowings under our Receivables Purchase Agreement, revolving credit facility, and delayed-draw term loan facility are at variable interest rates and expose us to interest rate risk.

If interest rates increase, our debt service obligations on variable rate indebtedness will increase even though the amount borrowed remains the same.

Our net income and cash flows, including our cash available for servicing our indebtedness, will correspondingly decrease.

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

At December 31, 2023, the balance of our goodwill, other intangible assets, internal use software, and long-lived assets was $3.1 billion, and the total market value of the Company’s outstanding shares was $4.5 billion.

As of December 31, 2024, the balance of our goodwill, other intangible assets, internal use software, and long-lived assets was $3.4 billion, and the total market value of the Company’s outstanding shares was $5.1 billion.

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

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Our leasing business could also be at risk of inventory impairment if truck deliveries are not aligned with owner-operator demand, which could also have a materially adverse effect on our profitability.

Should demand for freight shipments weaken or our margins suffer due to increased competition or general economic conditions, we may have to limit our fleet size or operate our transportation equipment for longer periods, either of which could have a materially adverse effect on our operations and profitability.

Should demand for freight shipments weaken or our

margins suffer due to increased competition or general economic conditions, we may have to limit our fleet size or operate our transportation equipment for longer periods, either of which could have a materially adverse effect on our operations and profitability.

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

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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.

For example, the Organisation for Economic Co-operation and Development (“OECD”) agreed to enact Pillar Two, which introduces a global minimum effective tax rate whereby certain multinational groups are subject to a 15% minimum tax which will be effective in some countries as early as 2024.

While we do not believe Pillar Two will have a material impact on the Company, we continue to monitor the developments to evaluate the impact it could have on our effective tax rate, if any.

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.

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.

We regularly assess the likelihood of an adverse outcome resulting from these audits to determine the adequacy of our provision for taxes.

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As a supplement to our self-insurance program, we maintain insurance with excess insurance carriers for potential losses, which exceed the amounts we self-insure.

Although we believe our aggregate insurance limits should be sufficient to cover our historic claims amounts, the commercial trucking industry has experienced a wave of blockbuster or so-called “nuclear verdicts,” where juries have awarded tens or even hundreds of millions of dollars to accident victims and their families.

Although we believe our aggregate insurance limits should be sufficient to cover our historic claims amounts both individually and in the aggregate, the commercial trucking industry has experienced a wave of so-called “nuclear verdicts,” where juries have awarded tens or even hundreds of millions of dollars to accident victims and their families.

Given this recent trend, it is possible that one or more claims could exceed our aggregate coverage limits.

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

Given the current claims settlement environment, the amount of coverage available from excess insurance carriers is decreasing, and the premiums for this excess coverage are increasing significantly.

Given the current truck litigation environment, the amount of coverage available from excess insurance carriers is decreasing, and the premiums for this excess coverage are increasing significantly.

For the foregoing reasons, our insurance and claims expenses may increase, or we could increase our self-insured retention as policies are renewed or replaced.

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A Voting Trust holds the shares of Class A common stock that are beneficially owned by the Schneider family.

The independent directors who are members of our Corporate Governance Committee serve as trustees of the Voting Trust, and in general, those directors have full power and discretion to vote the Class A shares included in the Voting Trust with two exceptions.

First, in the case of any Major Transaction (as defined under our Amended and Restated Bylaws, including, most notably, a transaction resulting in more than 40% of the voting power of our common stock being held outside of the Schneider family), the independent directors of our Corporate Governance Committee must vote the shares of common Class A stock held in the Voting Trust as directed by the trustees of certain trusts which have been established for the benefit of certain Schneider family members.

The directors who are members of our Corporate Governance Committee and are not Schneider family members serve as trustees of the Voting Trust, and in general, those directors have full power and discretion to vote the Class A shares included in the Voting Trust with two exceptions.

certain Schneider family members.

As a result, the outcome of the vote on any Major Transaction is not within the discretion of the Voting Trustees.

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In the U.S., the regulatory and statutory landscape relating to the classification status of independent contractors (or workers) who work in temporary or flexible jobs and who are paid by the task or project is evolving.

Various 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 choice 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 state and federal authorities have enacted, or are considering, new laws to make it harder to classify workers as independent contractors and easier for tax and other authorities to reclassify independent contractors as employees.

On January 9, 2024, the DOL released its final rule addressing when employers can classify workers as independent contractors under federal labor law.

The new rule replaces the existing standard that was enacted under the Trump Administration.

The rule, set to take effect March 11, 2024, directs employers to consider six criteria and employ a “totality of the circumstances” analysis to determine whether a worker is an employee or a contractor, without predetermining whether one criteria outweighs the other.

Under current DOL regulations, employers must consider six criteria and employ a “totality of the circumstances” analysis to determine whether a worker is an employee or a contractor, without predetermining whether one criterion outweighs the other.

The six factors, which are non-exhaustive, include a worker's opportunity for profit or loss;

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The factors also include the extent to which work performed is integral to the employer's business and the use of a worker's skill and initiative.

We believe that the final rule, as compared with its Trump Administration predecessor, is a less predictable framework that increases the likelihood of an employee determination and could dramatically limit the circumstances under which we may classify our current independent contractor owner-operators as independent contractors under FLSA.

Because the final DOL independent contractor rule has not yet gone into effect, or been tested, we do not have any internal projections of the potential financial or operational impact of the final ruling.

Any legislation or regulation, however, which limits our ability to classify owner-operators as independent contractors could result in driver shortages or adversely impact our freight capacity which, in turn, could adversely impact our results of operations.

Although current DOL regulations increase the likelihood of an employee determination and, could dramatically limit the circumstances under which we may classify our current independent contractor owner-operators as independent contractors under FLSA, the DOL under the incoming Trump administration recently requested a pause in oral arguments regarding the current Independent Contractor Rule which may indicate that the new administration may not defend the rule.

However, any legislation or regulation which limits our ability to classify owner-operators as independent contractors could result in driver shortages or adversely impact our freight capacity which, in turn, could adversely impact our results of operations.

Additionally, courts in certain jurisdictions have issued decisions that could result in a greater likelihood that independent contractors will be judicially classified as employees.

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

We also operate in various Canadian provinces (as granted by the Ministries of Transportation and Communication in such provinces) and contract with third-party carriers to transport freight into Mexico.

We also operate in various Canadian provinces and contract with third-party carriers to transport freight into Mexico.

Our failure to comply with any applicable laws, rules, or regulations to which we are subject, whether actual or alleged, could expose us to fines, penalties, or potential litigation liabilities, including costs, settlements, and judgments.

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

The EPA and the NHTSA have begun taking coordinated steps in support of a new generation of clean vehicles and engines to reduce GHG emissions.

Complying with these and any future GHG regulations enacted by the CARB, EPA, NHTSA, and/or any other state or federal governing body has increased, and will likely continue to increase, the cost of our new tractors, may increase the cost of new trailers, may require us to retrofit certain of our trailers, may increase our maintenance costs, and could impair equipment productivity and increase our operating costs, particularly if such costs are not offset by potential fuel savings.

These adverse effects, combined with the uncertainty as to the reliability of the newly designed diesel engines and the

residual values of our equipment, could materially increase our costs or otherwise adversely affect our business or operations.

In recent years, the EPA and the NHTSA have either finalized or proposed regulations which aim to require truck OEMs to develop and sell a new generation of clean vehicles and engines to reduce GHG emissions.

The OEMs’ compliance with those regulations, as well as similar state or federal regulations, has increased, and will likely continue to increase, the cost of our new tractors and, may increase the cost of new trailers, may require us to retrofit certain of our trailers, may increase our maintenance costs, and could impair equipment productivity and increase our operating costs, particularly if such costs are not offset by potential fuel savings.

These adverse effects, combined with the uncertainty as to the reliability of the newly designed diesel engines and any related negative impact on the residual values of our equipment, could materially increase our costs or otherwise adversely affect our business or operations.

However, we cannot predict the extent to which our operations and productivity will be impacted.

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If a spill or other accident involving hazardous substances occurs, if there are releases of hazardous substances we transport, if soil or groundwater contamination is found at our facilities or results from our operations, or if we are found to be in violation of applicable laws or regulations, we could be liable for cleanup costs, other damages, fines, or penalties, any of which could be in material amounts or have a materially adverse effect on our business and operating results.

Additionally, in 2023, CARB passed ACF, a groundbreaking regulation designed to phase out the sales of medium and heavy-duty internal combustion engine trucks in California.

The act aligns with the state’s long-term vision of transitioning the state’s transport system to zero-emissions vehicles by 2045.

Other states have followed suit and enacted similar legislation.

Despite successfully adding BEVs to our ntermodal fleet in California, the emission targets and timelines established by the ACF will make it more challenging for us to continue our current truckload and other operations in California and we believe will result in increased operating costs for us in California.

We are subject to various regulations which are aimed at reducing GHG emissions and mandating GHG emissions disclosures, which could adversely impact our results of operations.

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Nevertheless, federal, state, and local governmental agencies continue to engage in efforts to support legislation and regulations mandating the transition of diesel fuel-based commercial motor vehicles, such as Class 8 tractors operated by the Company’s independent owner operators and third-party brokerage carriers, to ZEVs.

In 2022, the SEC proposed the SEC Climate Disclosure Rule that would require dramatic changes in the nature and extent of disclosures by public companies regarding their climate risks, progress on their climate goals and information on their Scope 1, Scope 2 and, as proposed, Scope 3 emissions.

According to the SEC, the newly proposed rule would require SEC-registered companies to include detailed climate-related information in registration statements and periodic reports such as 10-K annual reports including:

their climate-related risks and actual or likely material impacts on their business, strategy, and outlook;

Scope 1 and Scope 2 greenhouse gas emissions, which would require attestation reports for accelerated filers;

Scope 3 emissions if either of two conditions are present:

1) if Scope 3 emissions are material to the company or 2) if the company has set an emissions target or goal that includes Scope 3 emissions;

and certain climate-related financial statement metrics and related disclosures in a note to audited consolidated financial statements.

The proposed SEC Climate Disclosure Rule includes footnote disclosure, which would be subject to the financial statement audit and management’s internal control over financial reporting, as well as disclosures outside the financial statements, including a scope 1 and scope 2 greenhouse gas attestation requirements for accelerated and large accelerated filers.

If adopted generally as proposed, we expect that we would need to expand our disclosures, even as the reporting timeline is accelerated.

Should the Company fail to implement appropriate policies and procedures to accurately track or report all of the information required under the proposed SEC Climate Disclosure Rule, it could be determined that the Company has weaknesses in its internal controls, the Company would not be able to obtain the

required third-party attestation report or file them timely and could lose customers.

Should any of those events occur, the Company would face fines and disciplinary actions by the SEC and the Company’s share price could be negatively impacted.

At the state level, the CARB has adopted new regulations that would mandate the transition of commercial trucking operations in California to ZEVs over time.

To the extent that the ACF regulation survives legal challenges and becomes effective, we expect that the ACT will impact the cost and/or supply of traditional diesel tractors.

Moreover, despite our limited deployment of BEVs in our intermodal fleet and making adjustments to our operations to comply with the ACT, no assurances can be given with respect to the extent that the Company, its independent owner-operators, or third-party capacity providers will choose to become CARB-compliant by purchasing a ZEV.

Accordingly, unless, in addition to its intermodal operations in California, the Company opts to become CARB-compliant in its truckload operations, the Company may not be permitted to haul loads that would require travel within California, which could negatively affect the ability of the Company to service customer freight needs for freight originating from, delivering to, or traveling through California.

Furthermore, mandates requiring the transition to ZEVs would create substantial costs for the Company’s third-party capacity providers and, in turn, increase the cost of purchased transportation to the Company.

In 2024, the SEC adopted climate disclosure rules to enhance and standardize climate-related disclosures by public companies and in public offerings.

Among other things, the final rules will require a registrant to disclose:

(a) climate-related risks that have had or are reasonably likely to have a material impact on the registrant’s business strategy, results of operations, or financial condition;

(b) the actual and potential material impacts of any identified climate-related risks on the registrant’s strategy, business model, and outlook;

(c) for large accelerated filers and accelerated filers like us that are not otherwise exempted, information about material Scope 1 and Scope 2 emissions;

and (d) for those required to disclose Scope 1 and/or Scope 2 emissions (which would include us), an assurance report at the limited assurance level, which, following an additional transition period, will be at the reasonable assurance level.

In addition, California and other states have enacted laws which mandate certain climate-related disclosures.

As a result, we have and, expect that we will need to continue to expand our climate-related disclosures to comply with the SEC’s and other state disclosure requirements.

Should the Company fail to implement appropriate policies and procedures to accurately track or report all of the information required under these regulations and laws, it could be determined that the Company has weaknesses in its internal controls, and the Company would not be able to obtain the required third-party attestation report or file them timely and could lose customers.

Should any of those events occur, the Company could face fines and penalties from the SEC and other states and the Company’s share price could be negatively impacted.

At the state level, CARB has withdrawn its request for an EPA waiver to enforce its ACF rule.

The withdrawal means CARB is no longer seeking to enforce its ZEV mandate on fleets.

Other states have enacted similar legislation to the ACF and, in the wake of CARB’s decision, it is uncertain whether that legislation will be enforced.

Mandates requiring the transition to ZEVs would create substantial costs for the Company’s third-party capacity providers and, in turn, increase the cost of purchased transportation to the Company.

An increase in the costs to purchase, lease, or maintain tractor equipment or in purchased transportation cost caused by existing or new regulations, without a corresponding increase in price to the customer, could adversely affect our results of operations and financial condition.

Due primarily to the uncertainty of the timing of availability of compliant tractors from OEMs and the timing of the effectiveness of such laws and regulations, we are not currently able to forecast whether such impact will be material.

We, and others, currently do not expect that long-haul trucking operations powered by electricity, natural gas, or hydrogen-based powertrains rather than diesel, will become commercially viable at scale throughout North America in the next five years.

However, as various technology alternatives continue to develop and mature and investment in infrastructure continues, local or regional service in certain geographic areas utilizing Class 8 tractors powered by electricity, natural gas, or hydrogen-based powertrains may become commercially viable in such time frame.

We continue to actively monitor, evaluate, and test developments in the trucking industry related to the design, manufacture, operation, and support of heavy-duty trucks powered by electricity, natural gas, or hydrogen-based powertrains in order to consider the implementation of initiatives involving those technologies, as those technologies and the related infrastructure needed to support them may mature in the future.

An increase in costs to implement these initiatives without a corresponding increase in price to the customer could adversely affect our results of operations and financial condition.

In 2023, California also passed three climate reporting laws, which apply to companies that do business in California, which require such companies to make mandated climate-related disclosures, SB 253 and SB 261.

We are monitoring the pending legal challenges to SB 253 and SB 261 and do not currently have internal projections of the potential financial or operational impact these laws or proposed regulations may have on our operations however, an increase in our operating costs to comply with these laws and make the required disclosures without a corresponding increase in our fuel savings or pricing could adversely affect our results of operations and financial condition.

In 2023, in a significant step toward implementing transparency in voluntary carbon markets, California also enacted the VCMDA which requires companies which operate in California and market or sell voluntary carbon offsets, or which make claims regarding the achievement of net zero emissions, carbon neutral status, or significant carbon emissions reductions to publicly disclose information documenting how the claim was determined to be accurate or accomplished and the measurement of interim progress.

The VCMDA authorizes California to bring civil actions against subject companies and seek civil penalties for misstatements or other violations of these laws, with a maximum fine of $500,000.

From time to time, in conjunction with delivering freight transportation services to certain of its customers, the Company purchases carbon credits or offsets to enable or assist such customers with achieving their carbon reduction targets.

Should the Company either fail to achieve its GHG emission reduction goals or California subsequently determines that any of its related green marketing claims are unachievable, inaccurate, or overstated, the Company could be found to be in violation of the VCDMA and be subject to statutory fines or penalties under the VCMDA, which could adversely affect our financial condition or results of operations.

in costs to implement these initiatives without a corresponding increase in price to the customer could adversely affect our results of operations and financial condition.

Refer to Item 1.

Business , for additional details on the ACT and ACF Regulations, the SEC Climate Disclosure Rule, California SB 253 and SB 261, and the VCMDA.

Business , for additional details on the ACT Regulations, the SEC Climate Disclosure Rule, California SB 253 and SB 261, and the VCMDA.

General Risk Factors

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Such data and information remain vulnerable to cyber-attacks, cybersecurity breaches, ransomware attacks, hackers, theft, or other unauthorized disclosure.

Like other companies in the transportation industry, we have identified, and expect to continue to identify, attempted cyberattacks and cyber security incidents, but none of

the attempted cyberattacks or cybersecurity incidents identified as of the filing date of this Annual Report on Form 10-K has had a material impact on us, except as the continued presence of cybersecurity threats has resulted, and is expected to continue to result, in significant investments in cybersecurity risk management programs, processes, and tools.

Like other companies in the transportation industry, we have identified, and expect to continue to identify, attempted cyberattacks and cybersecurity incidents, but none of the attempted cyberattacks or cybersecurity incidents identified as of the filing date of this Annual Report on Form 10-K has had a material impact on us, except as the continued presence of cybersecurity threats has resulted, and is expected to continue to result, in significant investments in cybersecurity risk management programs, processes, and tools.

If a cyberattack, cybersecurity breach, ransomware, or other similar attack on us is successful, this 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.

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In appropriate cases, we have taken and will seek subrogation from third parties who are responsible for losses or damages that we may become legally obligated to pay to claimants.

In particular, the defense of trucking accidents is challenging for a variety of reasons, one of which is the recent rise in “nuclear verdicts” - excessive jury awards that surpass what would generally be regarded as reasonable or rational compensation for the injuries or damages suffered, social inflation, societal perceptions of the trucking industry, and ultimately, litigation financing, where third parties are financing litigation in return for a share of settlement proceeds or awarded damages.

In particular, the defense of trucking accidents is challenging for a variety of reasons, one of which is the recent rise in the industry of nuclear verdicts which typically involve excessive jury awards that surpass what would generally be regarded as reasonable or rational compensation for the injuries or damages suffered.

Another challenge facing trucking companies is

devising strategies to defend or offset the various tactics employed by plaintiff’s counsel, inside and outside the courtroom, that have and continue to contribute to the rise in nuclear verdicts and the use by plaintiffs’ lawyers of third party litigation funding and litigation advertising, which enables speculative claims by third-party litigation and drives award demands up, thereby widening the gap for parties to negotiate a reasonable settlement.

Litigation is inherently uncertain, and the costs of defending litigation, particularly class-action litigation, may be substantial, and in any period, we could experience significant adverse results, which could have an adverse effect on our financial condition or results of operations.

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We have developed certain initiatives and goals relating to ESG matters.

Our ability to successfully execute these initiatives and accurately report our progress presents

numerous operational, financial, legal, reputational, and other risks, many of which are outside our control, and all of which could have a material negative impact on our business.

Our ability to successfully execute these initiatives and accurately report our progress presents numerous operational, financial, legal, reputational, and other risks, many of which are outside our control, and all of which could have a material negative impact on our business.

Additionally, the implementation of these initiatives imposes additional costs on us.

8 unchanged sentences

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