What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-26 compared with 2023-02-27 · 48 added, 45 removed, 216 unchanged (30% of the section changed)

4 unchanged sentences

Werner, who started the business with one truck at the age of 19.

He served as our Chairman until his term ended at the 2021 Annual Meeting of Stockholders, and was then named Chairman Emeritus by the Board of Directors in recognition of his longstanding leadership.

He served as our Chairman until his term ended at the 2021 Annual Meeting of Stockholders, and was then named Chairman Emeritus by the Board of Directors (the “Board”) in recognition of his longstanding leadership.

We were incorporated in the State of Nebraska in September 1982 and completed our initial public offering in June 1986 with a fleet of 632 trucks as of February 1986.

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Our TTS fleets operate throughout the 48 contiguous U.S.

states pursuant to operating authority, both common and contract, granted by the U.S.

states pursuant to operating authority, both common and contract, granted by U.S.

Department of Transportation (“DOT”) and pursuant to intrastate authority granted by various U.S.

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Prior to the sale of WGL, Werner Logistics provided international services throughout North America and Asia, with additional coverage throughout Australia, Europe, South America, and Africa.

Werner Logistics had over 70,000 qualified carrier logistics relationships as of December 31, 2022.

Business Acquisitions

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On October 1, 2022, we acquired 100% of the equity interests in FAB9, Inc., doing business as Baylor Trucking, Inc.

Baylor, based in Milan, Indiana, operates 200 trucks and 980 trailers in the east central and south central United States.

Baylor, based in Milan, Indiana, operates in the east central and south central United States.

Prior to the acquisition, Baylor achieved revenues of $81.5 million for the 12-month period ended August 31, 2022.

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Revenues generated by Dollar General are reported in both of our reportable operating segments.

The industry groups of our top 50 customers are 60% retail and consumer products, 17% manufacturing/industrial, 15% food and beverage and 8% logistics and other.

The industry groups of our top 50 customers are 57% retail and consumer products, 20% food and beverage, 15% manufacturing/industrial, and 8% logistics and other.

Many of our One-Way Truckload customer contracts may be terminated upon 30 days’ notice, which is common in the truckload industry.

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Most of our associates are based in the U.S., with about 1% based in Mexico and Canada.

None of our U.S.

or Canadian associates are represented by a collective bargaining unit, and we consider relations with our associates to be good.

or Canadian associates are not represented by a collective bargaining unit with the exception of fewer than 30 employees at two locations of a U.S.

We generally consider relations with our associates to be good.

Health & Safety:

Werner maintains a safety culture that is based on the premise of eliminating workplace incidents, risks and hazards.

In 2022, our trucking business achieved its lowest work injury rate in 17 years and we achieved the lowest DOT preventable accident rate per million miles in 10 years.

In 2023, our trucking business achieved its lowest work injury rate on record, and we achieved our lowest DOT preventable accident rate per million miles in 19 years.

The Werner Safety Department is responsible for all compliance and training issues as it relates to drivers under DOT regulation and Werner policy.

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We embrace these values as we move toward an increasingly inclusive culture where every associate feels empowered to bring their whole self to Werner.

Through our Inclusion, Diversity, Equity, Accountability & Learning (IDEAL) Council, we are proud to support ten Associate Resource Groups (“ARGs”).

These groups support our commitment to promoting and maintaining an inclusive culture for all associates by bringing together individuals from a wide range of backgrounds, experiences and perspectives.

The ARGs seek to foster a sense of shared community and empowerment for associates and allies who share and

support a common social identity, such as gender, ethnicity and sexual orientation.

During 2022, we created an advancement and retention plan, under which new programs are being implemented to increase and elevate women and diverse talent in the management pipeline.

Through our Inclusion, Diversity, Equity, Accountability & Learning (IDEAL) Council, we are proud to support 11 Associate Resource Groups (“ARGs”).

These groups support our commitment to promoting and maintaining an inclusive culture for all associates by bringing together individuals from a wide range of backgrounds, experiences and

perspectives.

The ARGs seek to foster a sense of shared community and empowerment for associates and allies who share and support a common social identity, such as gender, ethnicity and sexual orientation.

In 2023, Werner, as well as our recently acquired business, ReedTMS, were both recognized among the Top Companies for Women to Work for in Transportation by the Women in Trucking Association.

This was Werner’s fifth consecutive year of being recognized.

This was Werner’s sixth consecutive year of being recognized.

Werner was recognized for our support of gender diversity, flexible hours and work requirements, competitive compensation and benefits, and professional development and career advancement opportunities.

We were also recognized by 50/50 Women on Boards TM as a “3+” company for having three or more women on our corporate board of directors.

At Werner, our female driver workforce is double the industry average, and over half of our driver associates are ethnically diverse.

In 2023, Newsweek named Werner as one of America’s Greatest Workplaces for Diversity, America’s Greatest Workplaces, and America’s Greatest Workplaces for Parents and Families.

We were recognized by 50/50 Women on Boards TM as a “3+” company for having three or more women on our corporate board of directors in 2022.

At Werner, our female driver workforce is double the national industry average, and over 60% of our driver associates are ethnically diverse.

Additionally, over half of our non-driver associates and our corporate board of directors are female or ethnically diverse.

In 2023, Werner was honored to be recognized as No.

1 on the Top 10 Company Military Friendly® Spouse Employer list and No.

3 on the Top 10 Military Friendly® Spouse Employer list and No.

5 on the Top 10 Military Friendly® Employer list by VIQTORY.

These serve as Werner’s highest rankings ever received in these categories.

Werner also earned No.

49 on the 2023 Military Times Best for Vets Employer list.

Werner was awarded these designations for its commitment, effort, and success in creating sustainable and meaningful career paths for the military community.

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At Werner, we continue to take actions to strengthen our driver recruiting and retention to make Werner a preferred choice for the best drivers.

Our efforts include raising driver pay, maintaining a new truck and trailer fleet, purchasing best-in-class safety features for all new trucks, investing in our driver training school network and collaborating with customers to improve or eliminate unproductive freight.

Our efforts include offering competitive driver pay, maintaining a new truck and trailer fleet, purchasing best-in-class safety features for all new trucks, investing in our driver training school network and collaborating with customers to improve or eliminate unproductive freight.

We are focused on providing strong mileage utilization and a large percentage of driving jobs in shorter-haul operations (such as Dedicated and Regional) that allow drivers to return home more often.

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They continue to gain industry experience through our career track program by partnering with a Werner-certified leader prior to that driver becoming a solo driver with their own truck.

As mentioned above, the recruiting environment for recent driver training school graduates became even more challenging in 2021 as social distancing requirements, state licensing cut backs and temporary closures limited the number of placement drivers entering our career track program.

The availability of these drivers has also been negatively impacted by the decreased availability of student loan financing for driver training schools.

At the end of 2022, we operated a total of 23 driver training locations to assist with the training and development of drivers for our company and the industry, and we expect to open one new driver training location during the first half of 2023.

At the end of 2023, we operated a total of 23 driver training locations to assist with the training and development of drivers for our company and the industry.

Independent Contractors:

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We, along with others in the trucking industry, however, continue to experience independent contractor recruitment and retention difficulties that have persisted over the past several years.

Challenging operating conditions, including inflationary cost increases that are the responsibility of independent contractors and a shortage of financing available to independent contractors for equipment purchases, continue to make it difficult to recruit and retain independent contractors.

Challenging operating conditions, including inflationary cost increases that are the responsibility of independent contractors and the availability and cost of equipment financing, continue to make it difficult to recruit and retain independent contractors.

Revenue Equipment

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The TTS segment company tractors were primarily manufactured by International (a Navistar company), Freightliner (a Daimler company), Kenworth and Peterbilt (both divisions of PACCAR).

The Werner Final Mile company delivery trucks are primarily manufactured by Hino.

We adhere to a comprehensive maintenance program for both company tractors and trailers.

The Werner Final Mile company delivery trucks are primarily manufactured by Hino, International, and Freightliner.

We adhere to a comprehensive maintenance

program for both company tractors and trailers.

We inspect independent contractor tractors prior to acceptance for compliance with Werner and DOT operational and safety requirements.

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The average age of our trailer fleet was 4.9 years at December 31, 2023, compared to 5.0 years at December 31, 2022.

Our trucks are equipped with satellite tracking devices, and nearly all of our company-owned trucks have collision mitigation safety systems and automated manual transmissions.

Our trucks are equipped with tablet-based telematics, and nearly all of our company-owned trucks have collision mitigation safety systems and automated manual transmissions.

We operated 30,810 trailers at December 31, 2023, comprised of dry vans, flatbeds, temperature-controlled, and other specialized trailers.

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The tanks are routinely inspected to help prevent and detect such problems.

We are committed to supporting global efforts to reduce carbon emissions and to continually evaluate and identify new environmental initiatives to support global sustainability efforts, including testing of alternative fuels and investing in start-stop idle reduction technology for our trucks.

We currently maintain a late-model truck fleet to take advantage of latest technologies to reduce fuel consumption and emissions.

Our future environmental goals include doubling intermodal usage by 2030, thereby further reducing emissions, and by 2035, reducing carbon emissions by 55% compared to a 2007 baseline, with 30% or more of all Company truck miles being executed by zero emission vehicles.

As a for-hire motor carrier, we are regulated by the DOT, and certain areas of our business are subject to applicable federal, state, and international laws and regulations.

DOT and an agency within DOT, the Federal Motor Carrier Safety Administration (“FMCSA”), generally govern matters such as safety requirements and compliance, registration to engage in motor carrier operations, drivers’ hours of service (“HOS”), and certain mergers, consolidations, and acquisitions.

We are committed to supporting global efforts to reduce carbon emissions and we continue to update our fleet of tractors to provide energy-efficient transportation options for our customers, including investing in and testing alternative fuels, advanced equipment technologies, and additional fleet enhancements.

We currently maintain a late-model truck fleet to take advantage of the latest technologies to reduce fuel consumption and emissions.

Our future environmental goals include doubling intermodal usage by 2030, thereby further reducing emissions, and by 2035, reducing greenhouse gas emissions by 55% compared to a 2020 baseline.

As a for-hire motor carrier, Werner is subject to federal, state, local, and international laws and regulations and is regulated by various federal, state, and local agencies including DOT, Federal Motor Carrier Safety Administration (“FMCSA”), U.S.

Department of Homeland Security, the U.S.

Environmental Protection Agency (“EPA”), among others.

DOT and an agency within DOT, the FMCSA, generally govern matters such as safety requirements and compliance, registration to engage in motor carrier operations, drivers’ hours of service (“HOS”), and certain mergers, consolidations, and acquisitions.

Werner maintains a satisfactory safety rating, which is the highest available rating of the three safety ratings given by FMCSA.

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CSA uses the Safety Measurement System (“SMS”) to analyze data from roadside inspections, crash reports, and investigation results.

The Fixing America’s Surface Transportation (“FAST”) Act of 2015 directed FMCSA to remove from public view certain information regarding carrier’s compliance and safety performance.

The FAST Act also instructed FMCSA to study the accuracy of CSA and SMS data and issue a corrective action plan.

The Fixing America’s Surface Transportation (“FAST”) Act of 2015 directed FMCSA to remove from public view certain information regarding a carrier’s compliance and safety performance.

The FAST Act also instructed FMCSA to study

the accuracy of CSA and SMS data and issue a corrective action plan.

The FMCSA provided a report to Congress in 2020 outlining the changes it may make to the CSA program;

however, it remains unclear if, when, and to what extent any such changes will occur.

Werner continues to monitor FMCSA’s actions and CSA related developments.

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In August 2020, FMCSA proposed a pilot program allowing commercial drivers to pause their 14-hour driving window, which Werner continues to monitor.

Werner is the industry leader for ELDs to record driver hours and pioneered the Werner Paperless Logging System in 1996 that was subsequently approved for our use by FMCSA in 1998.

FMCSA’s ELD Final Rule went into effect in December 2017, requiring all motor carriers to have certified ELDs that meet specific standards for documenting HOS.

The FMCSA Commercial Driver’s License Drug and Alcohol Clearinghouse (the “Clearinghouse”) Final Rule was published in December 2016 with the effective date of January 6, 2020.

The Clearinghouse requires motor carriers, designated service agents, medical review officers, and substance abuse professionals to submit records related to drug and alcohol tests, including test refusals and positive drug test results, to the nationwide database.

Motor carriers are also required to query the database prior to hiring an applicant and on an annual basis.

Continuing in 2023, motor carriers are required to perform annual random drug tests for 50% of existing drivers.

The rate was increased from 25% on January 1, 2020 in response to the 2018 FMCSA Drug and Alcohol Testing Survey, which reported an increase to 1.0% of the random testing positive rate for controlled substances.

The minimum annual percentage rate for random alcohol testing remains at 10%.

The minimum annual percentage rate for random alcohol testing remains at 10% for 2024.

FMCSA issued its final rule for Entry-Level Driver Training (“ELDT”) in December 2016.

However, after delays announced by FMCSA, the new effective date was February 7, 2022.

However, after delays announced by FMCSA, the effective date was February 7, 2022.

ELDT now requires anyone wanting to obtain a Commercial Driver’s License to successfully complete a specific program of theory and behind-the-wheel instruction provided by a school or other entity on FMCSA’s new Training Provider Registry.

We are in compliance with the ELDT rule.

Following the signing of the Infrastructure Investment and Jobs Act (IIJA) on November 15, 2021, the FMCSA is required to establish a pilot program to allow persons ages 18, 19, and 20 to operate commercial motor vehicles in interstate commerce.

The Infrastructure Investment and Jobs Act of 2021 required the FMCSA to establish a pilot program to allow persons ages 18, 19, and 20 to operate commercial motor vehicles in interstate commerce.

The FMCSA’s Safe Driver Apprenticeship Pilot Program is currently accepting applications by motor carriers who are willing to participate in the pilot program, and FMCSA plans to limit the participation to 1,000 carriers and 3,000 apprentices.

Environmental Protection Agency (“EPA”) and DOT announced in August 2016 Phase 2 of the Greenhouse Gas and Fuel Efficiency Standards for Medium and Heavy-Duty Trucks.

EPA and DOT announced in August 2016 Phase 2 of the Greenhouse Gas and Fuel Efficiency Standards for Medium and Heavy-Duty Trucks.

The final rule requires a reduction of carbon emissions and fuel savings from engines, vehicles, and new trailers to be phased in over the next decade.

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In December 2022, EPA adopted its first final rule, which sets stronger emissions standards to reduce air pollution, including pollutants that create ozone and particulate matter, from heavy-duty vehicles and engines starting in model year 2027.

In April 2023, EPA announced a proposed rule, Greenhouse Gas Emission Standards for Heavy-Duty Vehicles - Phase 3, which would phase in stronger greenhouse gas emissions standards and zero-emission vehicle requirements for heavy-duty trucks for model years 2028-2032.

Werner continues monitoring any EPA-related developments impacting its fleet.

California’s ongoing emissions reduction goals have significantly impacted the industry.

The California Air Resources Board regulations not only apply to California intrastate carriers, but also to carriers outside of California who own or dispatch equipment in the state.

The California Air Resources Board (“CARB”) regulations apply to both in-state California carriers and carriers outside of California who own or dispatch equipment in the state.

Werner is impacted by various CARB regulations including the Truck and Bus Regulation, Clean Truck Check (heavy-duty inspection and maintenance), Advanced Clean Trucks, Advanced Clean Fleets, Temperature Refrigeration Units, among other currently effective and forthcoming regulations.

Werner continues to structure our fleet plans to operate compliant equipment in California.

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We do not believe that compliance with these regulations has a material effect on our capital expenditures, earnings, and competitive position.

Werner is dedicated to participating in the development of meaningful public policy by continuing to evaluate local, state, and federal legislative and regulatory actions that impact our operations.

Werner is dedicated to participating in the development of meaningful public policy by engaging in local, state, and federal legislative and regulatory actions that impact our operations.

The freight transportation industry is highly competitive and includes thousands of trucking and non-asset-based logistics companies.

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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.

We believe that few other truckload carriers have greater financial resources, own more equipment or carry a larger volume of freight than us.

We believe that few other truckload carriers have greater financial resources, own more

equipment or carry a larger volume of freight than us.

We believe we are one of the largest carriers in the truckload transportation industry based on total operating revenues.

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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 1. Business