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What changed in ARCBEST CORP /DE/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ARCBEST CORP /DE/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+574 added−571 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in ARCBEST CORP /DE/'s 2023 10-K

574 paragraphs added · 571 removed · 427 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

126 edited+28 added−41 removed48 unchanged
Biggest changeArcBest holds an A+ culture rating by employees via Comparably, and we support our employees as they carry out our wellness value by participating in healthy workplace initiatives and representing our company in wellness events in their local communities. ​ In addition to the recognition noted above, ArcBest has been recognized with the following awards since 2021: ● “Training APEX Awards” (formerly “Training Top 100”) by Training magazine in 2022, marking the sixth year in a row for ArcBest to be honored, which was preceded by eight consecutive years of ABF Freight’s recognition on the list; ● Inbound Logistics’ list of “Top 100 Truckers” for the fifth consecutive year, continuing ABF Freight’s recognition on the list for the previous four years; ● Inbound Logistics’ 2022 G75 Green Supply Chain Partner for going above and beyond to prioritize green initiatives and help global supply chains become more sustainable; ● “FreightTech 100” by FreightWaves, Inc., as one of the most innovative and disruptive companies across the freight industry for the third consecutive year; ● Comparably Awards for “Best Company Perks & Benefits” and “Best CEOs for Women” for 2022 and 2021; “Best Company Compensation” for 2022; and “Best CEO,” “Best Company for Women,” and “Best HR Team” for 2021, highlighting ArcBest’s commitment to providing a work environment where all employees can thrive; ● 2022 Forrester “Return on Integration (ROI) Honors Winner,” awarding honoring leading organizations that made bold decisions to transform their business by integrating marketing, sales and product functions to align business goals and drive growth; ● 18th in The Commercial Carrier Journal’s 2022 list of “Top 250 For-Hire Carriers,” marking our seventh year of being listed; ● Transport Topic’s 2022 list of “Top 100 For-Hire Carriers” for our ninth consecutive year; ● Inbound Logistics’ “Top 100 3PL Providers” list as one of the best of the best third-party logistics companies in 2021; ● Bronze medal sustainability rating from EcoVadis in 2021, achieving sustainability performance recognition in the top half of all companies and industries rated across the world; ● Forbes as one of America’s “Best Large Employers” for 2021; Forbes’ Top 500 List of the “Best Employers for Diversity” in 2021, for the third consecutive year; and ● Forbes as one of America’s “Best-In-State Employers” in Arkansas in 2021 for the second consecutive year. ​ Our Chairman of the Board, President and CEO, Judy R.
Biggest changeOur employees are also great contributors of time to our local community through various volunteer activities. ​ In addition to the recognitions noted above, ArcBest has been recognized with the following awards since 2022: ● “Training APEX Awards” (formerly “Training Top 100”) by Training magazine in 2023, marking the seventh year in a row to be honored and 13th year to be recognized; ● Inbound Logistics’ list of “Top 100 Truckers” for the sixth consecutive year, continuing ABF Freight’s recognition on the list for the previous four years; ● Inbound Logistics’ 2023 G75 Green Supply Chain Partner, following receipt of this recognition in 2022, demonstrating ArcBest’s commitment to sustainability; ● “FreightTech 100” by FreightWaves, Inc., as one of the most innovative and disruptive companies across the freight industry for the third consecutive year and the fourth year overall; ● “FreightTech 25” by FreightWaves, Inc., ranked as No. 20 among the most innovative and disruptive companies changing the transportation industry’s tech landscape; ● Second annual “Top 500 For-Hire Carriers” by FreightWaves, Inc., recognizing companies on the basis of tractor count; ● Fortune 1000 List of Top Companies, ranking No. 621 in 2023, up from No. 696 in 2022; ● Six Comparably Awards, including for “Best Company Perks & Benefits,” “Best CEOs for Women,” “Best Company for Women,” “Best Company Compensation,” “Best Company Culture,” and “Best Leadership Teams” for 2023, following the receipt of three Comparably Awards in 2022 and highlighting ArcBest’s commitment to providing a work environment where all employees can thrive; ● “2023 Top Companies for Women to Work For in Transportation” list by the Women in Trucking Association, highlighting corporate cultures in the trucking industry that foster gender diversity, competitive compensation and benefits, and career advancement opportunities; ● Forrester “Return on Integration (ROI) Honors Winner,” in 2022 - award honoring leading organizations that made bold decisions to transform their business by integrating marketing, sales and product functions to align business goals and drive growth; ● 17th in The Commercial Carrier Journal’s 2023 list of “Top 250 For-Hire Carriers,” marking our eighth year listed; ● Transport Topic’s 2023 list of “Top 100 For-Hire Carriers” for our tenth consecutive year; ● Inbound Logistics’ “Top 100 3PL Providers” list as one of the best of the best third-party logistics companies in 2023; ● Supply Chain Brain’s 2023 list of Top 100 Great Supply Chain Partners for excellent customer service door-to-door; ● Armstrong & Associates, Inc’s “Top 50 U.S. 3PLs” list, which ranks the largest U.S. third-party providers by 2022 gross logistics revenue and turnover; ● One of America’s “Most Responsible Companies of 2024” by Newsweek and Statista, demonstrating our ongoing commitment to being a responsible corporate citizen; ● Bronze medal sustainability rating from EcoVadis in 2023, achieving sustainability performance recognition in the top half of all companies and industries rated across the world for the third consecutive year; ● Business Media, Inc.’s 2023 Power Partner Awards honoring Business-to-Business (B2B) organizations who go above and beyond in providing value to customers’ business; ● Named to TIME’S 2023 “Best Invention” list for ArcBest’s Vaux freight movement system in the Apps and Software category creating innovative technology that helps customers across all industries optimize operations and create remarkable efficiencies in their intralogistics processes; ● Received an honorable mention in the Enterprise category of Fast Company’s Innovation by Design Awards for our revolutionary freight movement technology, Vaux; ● VETS Indexes Employer Awards with a 4-Star Employer Designation for 2023, recognizing the nation’s top veteran employers; and ● U.S.
Under ERISA, as amended by the MPPA Act, an employer who contributes to a multiemployer pension plan and the members of such employer’s controlled group are jointly and severally liable for their share of the plan’s unfunded vested benefits in the event the employer ceases to have an obligation to contribute to the plan or substantially reduces its contributions to the plan (i.e., in the event of a complete or partial withdrawal from the multiemployer plans).
Under ERISA, as amended by the MPPA Act, an employer who contributes to a multiemployer pension plan and the members of such employer’s controlled group are jointly and severally liable for their share of the plan’s unfunded vested benefits in the event the employer ceases to have an obligation to contribute to the plan or substantially reduces its contributions to the plan (i.e., in the event of a complete or partial withdrawal from the multiemployer pension plans).
This innovative pricing mechanism enables customers to instantly access LTL rates online, by phone, or through application programming interface (“API”) technology for shipments within the United States, Canadian cross-border, Mexico, and Puerto Rico. We can offer customers the best price on each shipment by leveraging available capacity within the ABF Freight network at the time of the shipment.
This innovative pricing mechanism enables customers to instantly access LTL rates online, by phone, or through application programming interface (“API”) technology for shipments within the United States, Canadian cross-border, Mexico, and Puerto Rico. We can offer customers the best price on each shipment by leveraging available capacity within the ABF Freight network at the time of the quote.
The various tracking methods automatically update our fully integrated internal software and provide customers with real-time electronic updates. ​ We make information readily accessible to our customers through various electronic pricing, billing, and tracking services, including mobile-responsive websites that allow customers to access information about their shipments, request shipment pickup, and utilize various other digital tools.
The various tracking methods automatically update our fully integrated internal software and provide customers real-time electronic updates. ​ We make information readily accessible to our customers through various electronic pricing, billing, and tracking services, including mobile-responsive websites that allow customers to access information about their shipments, request shipment pickup, and utilize various other digital tools.
The Asset-Based segment’s careful cargo handling, access to other ArcBest logistics solutions, and use of technology, both internally to manage its business processes and externally to provide shipment visibility to its customers, are examples of how we add value to our services. ​ Our ArcBest segment operates in a very competitive asset-light logistics market that includes approximately 17,000 active brokerage authorities, as well as asset-based truckload carriers; logistics companies including large and small expedite carriers; foreign and U.S.-based non-vessel-operating common carriers; freight forwarders; internal shipping departments at companies that have substantial transportation requirements; smaller niche service providers; and a wide variety of solution providers, including large integrated transportation companies as well as regional warehouse and transportation management firms.
The Asset-Based segment’s careful cargo handling, access to other ArcBest logistics solutions, and use of technology, both internally to manage its business processes and externally to provide shipment visibility to its customers, are examples of how we add value to our services. ​ Our Asset-Light segment operates in a very competitive asset-light logistics market that includes approximately 29,000 active brokerage authorities, as well as asset-based truckload carriers; logistics companies including large and small expedite carriers; foreign and U.S.-based non-vessel-operating common carriers; freight forwarders; internal shipping departments at companies that have substantial transportation requirements; smaller niche service providers; and a wide variety of other solution providers, including large integrated transportation companies as well as regional warehouse and transportation management firms.
This includes, but is not limited to: ● Providing a workplace free from serious recognized hazards and complying with standards, rules, and regulations issued under the OSH Act; ● Examining workplace conditions to make sure they conform to applicable Occupational Safety and Health Administration Standards; and ● Ensuring employees have and use safe tools and equipment and properly maintain this equipment. ​ Our Asset-Based operations and our ArcBest segment’s network of third-party contract carriers must comply with industry regulations, including the ELD mandate of the Federal Motor Carrier Safety Administration (the “FMCSA”) for interstate commercial trucks and hours of service, safety and fitness, and other regulations of the DOT, including requirements related to drug and alcohol testing.
This includes, but is not limited to: ● Providing a workplace free from serious recognized hazards and complying with standards, rules, and regulations issued under the OSH Act; ● Examining workplace conditions to make sure they conform to applicable Occupational Safety and Health Administration Standards; and ● Ensuring employees have and use safe tools and equipment and properly maintain this equipment. ​ Our Asset-Based operations and our Asset-Light segment’s network of third-party contract carriers must comply with industry regulations, including the ELD mandate of the Federal Motor Carrier Safety Administration (the “FMCSA”) for interstate commercial trucks and hours of service, safety and fitness, and other regulations of the DOT, including requirements related to drug and alcohol testing.
We expand our revenue opportunities by deepening our existing customer and carrier relationships and securing new ones. We build relationships that last for decades, and our customers assign a high degree of value to the capacity options, high level of service, and professionalism we provide.
We expand our revenue opportunities by deepening our existing customer and carrier relationships and securing new ones. We build connections that last for decades, and our customers assign a high degree of value to the capacity options, high level of service, and professionalism we provide.
Environmental Protection Agency (the “EPA”) and the National Highway Traffic Safety Administration (the “NHTSA”) jointly finalized a national program establishing a second phase of greenhouse gas (“GHG”) emissions (“EPA/NHTSA Phase 2”), through their authorities under the Clean Air Act , as amended, imposing new fuel efficiency standards for medium- and heavy-duty vehicles and engines, such as those operated by our Asset- 13 Table of Contents Based segment, for model years 2021-2027 and also instituting fuel efficiency improvement technology requirements for trailer model years 2018-2027.
Environmental Protection Agency (the “EPA”) and the National Highway Traffic Safety Administration (the “NHTSA”) jointly finalized a national program establishing a second phase of greenhouse gas 12 Table of Contents (“GHG”) emissions (“EPA/NHTSA Phase 2”), through their authorities under the Clean Air Act , as amended, imposing new fuel efficiency standards for medium- and heavy-duty vehicles and engines, such as those operated by our Asset-Based segment, for model years 2021-2027 and also instituting fuel efficiency improvement technology requirements for trailer model years 2018-2027.
We conduct an annual survey as well as pulse surveys to request employee feedback to help us assess and improve engagement and implement changes to enhance our work environment. ​ Attracting, retaining, and upskilling qualified truck drivers is crucial to our business.
We conduct an annual survey as well as periodic pulse surveys to request employee feedback to help us assess and improve engagement and implement changes to enhance our work environment. ​ Attracting, retaining, and upskilling qualified truck drivers is crucial to our business.
We have continued to strategically invest in our Asset-Light operations to ensure we are positioned to serve the changing marketplace and meet our customers’ expanding needs by providing a comprehensive suite of transportation and logistics services.
We have continued to strategically invest in Asset-Light to ensure we are positioned to serve the changing marketplace and meet our customers’ expanding needs by providing a comprehensive suite of transportation and logistics services.
To address the driver shortage that continues to impact the freight transportation industry, we have strong hiring partnerships with the IBT and the military that allow us to hire and train potential drivers before they leave military service.
To address the driver shortage that continues to impact the freight transportation industry, we have strong hiring partnerships with the military that allow us to hire and train potential drivers before they leave military service.
ABF Freight offers interstate and intrastate services to approximately 51,000 communities in all 50 states, Canada, and Puerto Rico through 239 service centers. ABF Freight also provides motor carrier freight transportation services to customers in Mexico through arrangements with trucking companies in that country. ​ Our Asset-Based segment offers transportation of general commodities through standard, time-critical, and guaranteed LTL services.
ABF Freight offers interstate and intrastate services to approximately 51,000 communities in all 50 states, Canada, and Puerto Rico through 240 service centers. ABF Freight also provides motor carrier freight transportation services to customers in Mexico through arrangements with trucking companies in that country. ​ Our Asset-Based segment offers transportation of general commodities through standard, time-critical, and guaranteed LTL services.
The CMC is an additional pricing mechanism to better capture the value we provide in transporting these shipments. ​ Our Asset-Based and certain operations within our ArcBest segment assess a fuel surcharge based on the index of national on-highway average diesel fuel prices published weekly by the U.S. Department of Energy.
CMC is an additional pricing mechanism to better capture the value we provide in transporting these shipments. ​ Our Asset-Based and certain operations within our Asset-Light segment assess a fuel surcharge based on the index of national on-highway average diesel fuel prices published weekly by the U.S. Department of Energy.
However, there can be no certainty of the solvency of individual state guaranty funds. ​ We have been able to obtain what we believe to be adequate insurance coverage for 2023 and are not aware of any matters which would significantly impair our ability to obtain adequate insurance coverage at market rates for our operations in the foreseeable future.
However, there can be no certainty of the solvency of individual state guaranty funds. ​ We have been able to obtain what we believe to be adequate insurance coverage for 2024 and are not aware of any matters which would significantly impair our ability to obtain adequate insurance coverage at market rates for our operations in the foreseeable future.
As previously described in the “Asset-Based Segment” within this Business section, as of December 2022, approximately 82% of our Asset-Based segment’s employees were covered under the 2018 ABF NMFA, the collective bargaining agreement with the IBT, which will remain in effect through June 30, 2023. ​ Employee Attraction, Development, and Retention Our business results and future growth opportunities depend on our ability to successfully manage our human capital resources, including attracting, developing, retaining, and upskilling our personnel.
As previously described in the “Asset-Based Segment” within this Business section, as of December 2023, approximately 82% of our Asset-Based segment’s employees were covered under the 2023 ABF NMFA, the collective bargaining agreement with the IBT, which will remain in effect through June 30, 2028. ​ Employee Attraction, Development, and Retention Our business results and future growth opportunities depend on our ability to successfully manage our human capital resources, including attracting, developing, retaining, and upskilling our personnel.
After investigating our subsidiaries’ involvement in waste disposal or waste generation at such sites, we have either agreed to de minimis settlements or determined that our obligations, other than those specifically accrued with respect to such sites, would involve immaterial monetary liability, although there can be no assurance in this regard. ​ 14 Table of Contents It is anticipated that the resolution of our environmental matters could take place over several years.
After investigating our subsidiaries’ involvement in waste disposal or waste generation at such sites, we have either agreed to de minimis settlements or determined that our obligations, other than those specifically accrued with respect to such sites, would involve immaterial monetary liability, although there can be no assurance in this regard. ​ It is anticipated that the resolution of our environmental matters could take place over several years.
The information contained on our website does not constitute part of this Annual Report on Form 10-K, nor shall it be deemed incorporated by reference into this Annual Report on Form 10-K. ​ In addition to its reports filed or furnished with the SEC, the Company publicly discloses material information from time to time in our press releases, at annual meetings of shareholders, in publicly accessible conferences and investor presentations, and through our website (principally in its News and Events and Investor Relations pages). ​ 19 Table of Contents ​
The information contained on our website does not constitute part of this Annual Report on Form 10-K, nor shall it be deemed incorporated by reference into this Annual Report on Form 10-K. ​ In addition to its reports filed or furnished with the SEC, the Company publicly discloses material information from time to time in our press releases, at annual meetings of shareholders, in publicly accessible conferences and investor presentations, and through our website (principally in its News and Events and Investor Relations pages). ​ ​
More sophisticated supply chain practices are required as supply chains expand and become more complex, product and service needs continue to evolve, and companies look for solutions to their logistics challenges and lower-cost supply chain alternatives. ​ The transportation industry is subject to numerous laws, rules, and regulations, as further discussed below within “Environmental and Other Government Regulations,” and carriers are required to obtain and maintain various licenses and 10 Table of Contents permits, some of which are difficult to obtain.
More sophisticated supply chain practices are required as supply chains expand and become more complex, product and service needs continue to evolve, and companies look for solutions to their logistics challenges and lower-cost supply chain alternatives. ​ The transportation industry is subject to numerous laws, rules, and regulations, as further discussed below within “Environmental and Other Government Regulations,” and carriers are required to obtain and maintain various licenses and permits, some of which are difficult to obtain.
Online functions tailored to the services requested by customers include bill of lading generation, pickup planning, customer-specific price quotations, proactive tracking, customized email notification, logistics reporting, dynamic rerouting, and other connectivity tools. This technology allows customers to incorporate data from our systems directly into their own website, transportation management systems, or other information systems using EDI standards and secure API.
Online functions tailored to the services requested by customers include bill of lading generation, pickup planning, customer-specific price quotations, proactive tracking, customized email notification, logistics reporting, dynamic rerouting, and other connectivity tools. This technology allows customers to directly incorporate data from our systems into their websites, transportation management systems, or other information systems using EDI standards and secure API.
Once the carrier is selected, the cost for the transportation has been agreed upon, and the carrier has committed to providing the transportation, we are in contact with the carrier through numerous means of communication (i.e., mobile apps, satellite tracking, electronic logging device (“ELD”), and other communication units on the vehicles) to continually update the position of equipment in order to meet customers’ requirements to track the status of the shipment from origin to delivery.
Once the carrier is selected, the cost for the transportation has been agreed upon, and the carrier has committed to providing the transportation, we are in contact with the carrier through numerous means of communication (e.g., mobile apps, satellite tracking, electronic logging device (“ELD”), and other communication units on the vehicles) to continually update the position of equipment to meet customers’ requirements to track the status of the shipment from origin to delivery.
Rates on the remaining Asset-Based business, including business priced in the spot market, are subject to individual pricing arrangements negotiated at various times throughout the year. The majority of the business that is subject to negotiated pricing arrangements is associated with larger customer accounts with annually negotiated pricing arrangements.
Rates on the remaining Asset-Based business, including business priced in the spot market, are subject to individual pricing arrangements negotiated at various times throughout the year. Most of the business that is subject to negotiated pricing arrangements is associated with larger customer accounts with annually negotiated pricing arrangements.
We are also subject to compliance with the Foreign Corrupt Practices Act of 1977 , as amended and hold Customs-Trade Partnership Against Terrorism status for businesses within our Asset-Based and ArcBest segments. ​ If we were to violate the government regulations under which we operate, we may be subject to substantial fines or penalties or our business operations could be restricted, which could have a material adverse impact on our financial condition, results of operations, and cash flows. ​ ​ Human Capital Resources ​ Our people are at the heart of our success, and we provide a workplace that respects all cultures, perspectives, and experiences, so that we can provide the best atmosphere for our employees and the best service to our customers.
We are also subject to compliance with the Foreign Corrupt Practices Act of 1977 , as amended and hold Customs-Trade Partnership Against Terrorism status for businesses within our Asset-Based and Asset-Light segments. ​ If we were to violate the government regulations under which we operate, we may be subject to substantial fines or penalties or our business operations could be restricted, which could have a material adverse impact on our financial condition, results of operations, and cash flows. ​ ​ 14 Table of Contents Human Capital Resources ​ Our people are at the heart of our success, and we provide a workplace that respects all cultures, perspectives, and experiences, so that we can provide the best atmosphere for our employees and the best service to our customers.
Such diversity helps us better serve our customers around the globe. We partnered with a consulting firm specializing in diversity, equity, and inclusion (“DEI”) to measure and develop these areas of human capital management in our organization.
Such diversity enables us to better serve our customers around the globe. We partnered with a consulting firm specializing in diversity, equity, and inclusion (“DEI”) to measure and develop these areas of human capital management in our organization.
The no-exposure certification and stormwater permits may require periodic facility inspections and monitoring and reporting of stormwater sampling results. Management believes we are in substantial compliance with all such regulations. Notwithstanding current compliance, we previously determined that certain procedures regarding sampling, documentation, and reporting were not appropriately being performed in accordance with the CWA.
The no-exposure certification and stormwater permits may require 13 Table of Contents periodic facility inspections and monitoring and reporting of stormwater sampling results. Management believes we are in substantial compliance with all such regulations. Notwithstanding current compliance, we previously determined that certain procedures regarding sampling, documentation, and reporting were not appropriately being performed in accordance with the CWA.
While the fuel surcharge is one of several components in our overall rate structure, the actual rate paid by customers is governed by market forces and the overall value of services provided to the customer. ​ Industry Factors According to management’s estimates, and market studies by Armstrong & Associates, Inc. and the U.S.
While the fuel surcharge is one of several components in our overall rate structure, the actual rate paid by customers is governed by market forces and the overall value of services provided to the customer. ​ 9 Table of Contents Industry Factors According to management’s estimates, and market studies by Armstrong & Associates, Inc. and the U.S.
All reports and financial information filed with, or furnished to, the SEC can be obtained, free of charge, through our website located at www.arcb.com or through the SEC’s website located at www.sec.gov as soon as reasonably practical after such material is electronically filed with, or furnished to, the SEC.
All reports and financial information filed with, or furnished to, the SEC can be obtained, free of charge, through our website located at www.arcb.com or through the SEC’s website located at www.sec.gov as soon as reasonably practical after such material 19 Table of Contents is electronically filed with, or furnished to, the SEC.
Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K contains additional segment financial information, including revenues and operating income for the years ended December 31, 2022, 2021, and 2020. ​ Our Asset-Based carrier, ABF Freight, has been in continuous service since 1923.
Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K contains additional segment financial information, including revenues and operating income for the years ended December 31, 2023, 2022, and 2021. ​ Our Asset-Based carrier, ABF Freight, has been in continuous service since 1923.
Beyond this fundamental marketplace recognition of our collective brand identity, our other key brands represent additional unique value in their target markets. ​ We have registered or are pursuing registration of various marks or designs as trademarks in the United States, including, but not limited to “ArcBest,” “ABF Freight,” “FleetNet America,” “Panther,” “MoLo,” “U-Pack,” and “More Than Logistics.” For some marks, we also have registered or are pursuing registration in certain other countries. ​ Other Intellectual Property Additionally, our business and operations utilize and depend upon both internally developed and purchased technology.
Beyond this fundamental marketplace recognition of our collective brand identity, our other key brands represent additional unique value in their target markets. ​ We have registered or are pursuing registration of various marks or designs as trademarks in the United States, including, but not limited to “ArcBest,” “ABF Freight,” “Panther,” “MoLo,” “U-Pack,” “Vaux,” and “More Than Logistics.” For some marks, we also have registered or are pursuing registration in certain other countries. ​ 16 Table of Contents Other Intellectual Property Additionally, our business and operations utilize and depend upon both internally developed and purchased technology.
In the ArcBest segment, the information about each shipment is entered into an operating system that facilitates the selection of a contracted carrier or carriers based on the carrier’s service capability, equipment availability, freight rates, and other relevant factors.
In the Asset-Light segment, the information about each shipment is entered into an operating system that facilitates the selection of a contracted carrier or carriers based on the carrier’s service capability, equipment availability, freight rates, and other relevant factors.
Through implementing custom-built solutions and leading-edge technologies, we help our customers successfully navigate the complex logistics landscape so they can use their supply chain as their competitive advantage. ​ ArcBest internal product owners, architects, developers, data scientists, and others, who have a deep understanding of the transportation and logistics industry and our strategy and execution models, supplemented by expert external contractor services, work together to rapidly deliver superior solutions throughout our organization for customers and carrier capacity. ​ ​ 11 Table of Contents Directly addressing our customers’ supply chain challenges is a natural extension of our mission.
Through implementing custom-built solutions and leading-edge technologies, we help our customers successfully navigate the complex logistics landscape so they can use their supply chain as their competitive advantage. ​ ArcBest internal product owners, architects, developers, data scientists, and others who deeply understand the transportation and logistics industry and our strategy and execution models, supplemented by expert external contractor services, work together to rapidly deliver superior solutions throughout our organization for customers and carrier capacity. ​ 10 Table of Contents Directly addressing our customers’ supply chain challenges is a natural extension of our mission.
The segment’s U-Pack business also competes with self-move businesses who offer moving and storage container service. Competition is based primarily on price, service, and availability of flexible shipping options to customers.
The segment’s U-Pack business also competes with self-move businesses that offer moving and storage container services. Competition is based primarily on price, service, and availability of flexible shipping options to customers.
Notwithstanding current compliance, we are subject to on-going environmental remediation obligations concerning historical underground storage tank releases, for which the resolutions are not expected to have a material adverse effect on our financial condition, results of operations, or cash flows. ​ Certain of our Asset-Based service center facilities operate with no exposure certifications or stormwater permits under the federal Clean Water Act (the “CWA”), as amended.
Notwithstanding current compliance, including under a consent decree with the EPA, as discussed below, we are subject to on-going environmental remediation obligations concerning historical underground storage tank releases, for which the resolutions are not expected to have a material adverse effect on our financial condition, results of operations, or cash flows. ​ Certain of our Asset-Based service center facilities operate with no exposure certifications or stormwater permits under the federal Clean Water Act (the “CWA”), as amended.
ABF Freight has a partnership with the U.S. Military to train transitioning service members for our management roles through the Department of Defense SkillBridge program. ABF Freight also participates in the U.S. Army Partnership for Youth Success program.
Military to train transitioning service members for our management roles through the Department of Defense SkillBridge program. ABF Freight also participates in the U.S. Army Partnership for Youth Success program.
With the ability to optimize, connect and deliver across various modes of transportation, we serve as a single logistics resource. This integrated approach, combined with our technology and expertise, helps ensure our customers have the right solutions and capacity to meet their constantly changing needs. ​ We started 100 years ago as a local Arkansas freight hauler.
With the ability to optimize, connect and deliver across various modes of transportation, we serve as a single logistics resource. This integrated approach, combined with our technology, expertise, and scale, helps ensure our customers have the right solutions and capacity to meet their constantly changing needs. ​ We started over a century ago as a local Arkansas freight hauler.
We are effectively self-insured for $1.0 million of each workers’ compensation loss. For each third-party general liability loss, we are generally self-insured for $1.0 million.
We are effectively self-insured for $2.0 million of each workers’ compensation loss. For each third-party general liability loss, we are generally self-insured for $2.0 million.
Rooted in a strong history of innovation, technology is a key enabler of our strategy — it differentiates us in the marketplace and allows us to continuously evolve. Most of the technology applications used at ArcBest have been developed internally by our ArcBest Technologies subsidiary and are tailored specifically for customers, capacity suppliers and internal business processing needs.
Rooted in a strong history of innovation, technology is a pillar of our strategy — it differentiates us in the marketplace and allows us to continuously evolve. Most of the technology applications used at ArcBest have been developed internally by our ArcBest Technologies team and are tailored specifically for customers, capacity suppliers and internal business processing needs.
In recent years, we have invested in personnel and resources to develop our ESG program. We are integrating ESG factors into our strategy as we seek more sustainable approaches across our business and partner with customers to meet sustainability needs in their supply chains.
In recent years, we have invested in personnel and resources to develop our sustainability and corporate citizenship program. We are integrating these factors into our strategy as we seek more sustainable approaches across our business and partner with customers to meet sustainability needs in their supply chains.
ABF Freight participates in the EPA’s SmartWay Transport Partnership, a collaboration between the EPA and the freight transportation industry that helps freight shippers, carriers, and logistics companies reduce GHGs and diesel emissions. ABF Freight has also participated in opportunities to address environmental issues in association with the Sustainability Task Force of the American Trucking Associations.
ArcBest, ABF Freight, Panther, and MoLo participate in the EPA’s SmartWay Transport Partnership, a collaboration between the EPA and the freight transportation industry that helps freight shippers, carriers, and logistics companies reduce GHGs and diesel emissions. ABF Freight has also participated in opportunities to address environmental issues in association with the Sustainability Task Force of the American Trucking Associations.
We make financial contributions to a number of charitable organizations, many of which are supported by our employees. These employees volunteer their time and expertise, and many serve as officers or board members of various philanthropic organizations. In November 2022, to help guide our actions in our giving efforts, we announced our three philanthropic pillars — Community, Education and People.
We make financial contributions to a number of charitable organizations, many of which are supported by our employees. These employees volunteer their time and expertise, and many serve as officers or board members of various philanthropic organizations. To help guide our actions in our giving efforts, we have outlined our three philanthropic pillars — Community, Education and People.
Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K contains additional segment financial information, including revenues and operating income for the years ended December 31, 2022, 2021, and 2020. ​ ArcBest Segment Our ArcBest segment originated with the formation of ABF Logistics in July 2013, when we aligned the sales and operations functions of our organically developed logistics businesses.
Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K contains additional segment financial information, including revenues and operating income for the years ended December 31, 2023, 2022, and 2021. ​ Our Asset-Light segment originated with the formation of ABF Logistics in July 2013, when we aligned the sales and operations functions of our organically developed logistics businesses.
With the addition of MoLo, we offer a growing network of more than 95,000 approved contract carriers, with service to all 50 states, Canada, and Mexico. Additional value is created for customers through seamless access to the ABF Freight network. ​ Expedite Leveraging our best-in-class Panther fleet, we offer expedite freight transportation services to commercial and government customers.
Through our truckload and dedicated services, we offer a growing network of more than 105,000 approved contract carriers, with service to all 50 states, Canada, and Mexico. Additional value is created for customers through seamless access to the ABF Freight network. ​ Expedite Leveraging our best-in-class Panther fleet, we offer expedite freight transportation services to commercial and government customers.
The ArcBest segment includes the acquired ground expedite services of Panther; our acquired truckload and dedicated operations, including the truckload brokerage services of MoLo described below; household goods moving services under the U-Pack brand, for which the majority of the moves are provided with our Asset-Based operations; and our managed transportation solutions.
The Asset-Light segment includes the ground expedite services of Panther; our truckload and dedicated operations, including the truckload brokerage services of MoLo; household goods moving services under the U-Pack brand, for which the majority of the moves are provided with our Asset-Based operations; and our managed transportation solutions.
The trucking industry faces rising costs of compliance with government regulations on safety, equipment design and maintenance, driver utilization, and fuel economy, as well as increasing costs in certain areas, which are not industry-specific, including health care and retirement benefits.
The trucking industry faces rising costs of compliance with government regulations on safety, equipment design and maintenance, driver utilization, climate-related impact, and fuel economy, as well as increasing costs in certain areas that are not industry-specific, including health care and retirement benefits.
We believe space-based pricing better aligns our pricing mechanisms with the metrics which affect our resources and, therefore, our costs to provide logistics services.
We believe space-based pricing better aligns our pricing mechanisms with the metrics affecting our resources and, therefore, our costs to provide logistics services.
Additional value is created for customers through seamless access to the ABF Freight network, the Panther fleet, the MoLo truckload brokerage operation, our dedicated truckload division, and an extensive carrier network, offering strategic supply chain solutions with unique access to assured capacity. 8 Table of Contents ​ International Our international shipping and logistics services provide international ocean and air shipping solutions by partnering with ocean shipping lines and air freight carriers worldwide, as well as cross-border shipping and ground transportation to and from ports.
Additional value is created for customers through seamless access to the ABF Freight network, the Panther fleet, the MoLo truckload brokerage operation, and our dedicated truckload division, offering strategic supply chain solutions with unique access to assured capacity. ​ International Our international shipping and logistics services provide global ocean and air shipping solutions by partnering with ocean shipping lines and air freight carriers worldwide, as well as cross-border shipping and ground transportation to and from ports.
We strive to help customers solve their logistics challenges by efficiently providing a best-in-class experience with easy access to our integrated solutions. ​ For the year ended December 31, 2022, no single customer accounted for more than 2% of our consolidated revenues, and the ten largest customers, on a combined basis, accounted for approximately 12% of our consolidated revenues.
We strive to help customers solve their logistics challenges by efficiently providing a best-in-class experience with easy access to our integrated solutions. ​ 5 Table of Contents For the year ended December 31, 2023, no single customer accounted for more than 2% of our consolidated revenues, and the ten largest customers, on a combined basis, accounted for approximately 11% of our consolidated revenues.
ITEM 1. BUSINES S ​ ArcBest Corporation ​ ArcBest Corporation ™ (together with its subsidiaries, the “Company,” “ArcBest,” “we,” “us,” and “our”) is a multibillion-dollar logistics company that leverages our technology and a full suite of shipping and logistics solutions to meet our customers’ supply chain needs and help keep the global supply chain moving.
ITEM 1. BUSINES S ​ ArcBest Corporation ​ ArcBest Corporation ™ (together with its subsidiaries, the “Company,” “ArcBest,” “we,” “us,” and “our”) is a multibillion-dollar integrated logistics company that leverages technology and a full suite of solutions to meet our customers’ supply chain needs.
We have obtained or are pursuing patent protection on internally developed and certain purchased technology, including equipment and process patents in connection with the previously disclosed pilot test program at ABF Freight. ​ Commitment to Social and Environmental Responsibility We are focused on understanding the potential impact and related risks of ESG issues on our business and the impact of our operations on the environment.
We have obtained or are pursuing patent protection on internally developed and certain purchased technology, including equipment and process patents in connection with the previously disclosed Vaux freight handling program. ​ Commitment to Social and Environmental Responsibility We are focused on understanding the potential impact and related risks of environmental and social issues on our business and the impact of our operations on the environment.
As a result, our customers can provide shipping information and support directly to their own customers. ​ ArcBest has an Innovation Ambassador Program to encourage new, transformative ideas.
As a result, our customers can provide shipping information and support directly to their own customers. ​ 11 Table of Contents ArcBest has an Innovation Ambassador Program to encourage new, transformative ideas.
In addition, disruptions from unexpected events such as natural disasters and the COVID-19 pandemic have resulted in further utilization of expedited shipping and premium logistics services and have caused companies to focus on risk management within their supply chains. ​ Seasonality ​ Our operations are impacted by seasonal fluctuations that affect tonnage, shipment or service event levels, and demand for our services, which in turn may impact our revenues and operating results.
In addition, disruptions from unexpected events such as natural disasters, geopolitical conflicts and, in prior years, the COVID-19 pandemic have resulted in further utilization of expedited shipping and premium logistics services and have caused companies to focus on risk management within their supply chains. ​ Seasonality ​ Our reportable operating segments are impacted by seasonal fluctuations that affect tonnage, shipment levels, and demand for our services, which in turn may impact our revenues and operating results.
The remaining business is priced on an individual shipment basis considering each shipment’s unique profile, the value we provide to the customer, and current market conditions. ​ We allow shippers without negotiated published rates to obtain competitive LTL rates for their shipping needs with ABF Freight’s reliable service and capacity options.
The remaining business is priced on an individual shipment basis considering each shipment’s unique profile, the value we provide to the customer, network capacity, and current market conditions. ​ We allow shippers with established accounts and without negotiated published rates to obtain competitive LTL rates for their shipping needs with ABF Freight’s reliable service and capacity options through a dynamic pricing option.
This investment centers around remote-operated forklifts and was developed to create overall intralogistics strategies in ArcBest customer locations and help our customers build efficiencies in their own warehouses and distribution centers. ● Creation and implementation of an environmental, social, and governance (“ESG”) dashboard as part of our work to collect, analyze, and report Scope 1 (direct) and Scope 2 (indirect) emissions.
This investment centers around remote-operated forklifts and was developed to create overall intralogistics strategies in customer locations and help our customers build efficiencies in their own warehouses and distribution centers. ● Creation and implementation of a sustainability dashboard as part of our work to collect, analyze, and report Scope 1 (direct) and Scope 2 (indirect) emissions.
The Company was incorporated in Delaware in 1966 and is headquartered in Fort Smith, Arkansas. ​ 5 Table of Contents Asset-Based Segment Our Asset-Based segment provides LTL services through ABF Freight’s motor carrier operations. Asset-Based revenues accounted for approximately 55% of our total revenues before other revenues and intercompany eliminations in 2022.
The Company was incorporated in Delaware in 1966 and is headquartered in Fort Smith, Arkansas. ​ Asset-Based Segment Our Asset-Based segment provides LTL services through ABF Freight’s motor carrier operations. Asset-Based revenues accounted for approximately 63% of our total revenues before other revenues and intercompany eliminations in 2023.
In January 2022, two ABF Freight drivers were named by the American Trucking Associations as captains of the 2022-2023 “America’s Road Team,” continuing the long-time tradition of ABF Freight’s representation in this select program based on the drivers’ exceptional safety records and their strong commitment to safety and professionalism. ​ ABF Freight also partners with the IBT and the U.S.
In January 2024, three ABF Freight drivers were named by the American Trucking Associations as captains of the 2024-2025 “America’s Road Team,” continuing the long-time tradition of ABF Freight’s representation in this select program based on the drivers’ exceptional safety records and their strong commitment to safety and professionalism. ​ During 2023, ABF Freight partnered with the IBT and the U.S.
For the year ended December 31, 2022, no single customer accounted for more than 3% of revenues in the Asset-Based segment, and the segment’s ten largest customers, on a combined basis, accounted for approximately 12% of its revenues.
For the year ended December 31, 2023, no single customer accounted for more than 4% of revenues in the Asset-Based segment, and the segment’s ten largest customers, on a combined basis, accounted for approximately 14% of its revenues.
Additionally, in 2022, our ArcBest segment began leasing an LEED Gold certified office facility in Chicago, which was constructed to include a green roof, smart lighting, and energy-efficient HVAC units, as well as additional environmentally preferred features. ​ Contributions & Awards Our culture is focused on quality service and responsibility, and our employees are committed to the communities in which they live and work.
Additionally, in 2022, our Asset-Light segment began leasing a LEED Gold-certified office facility in Chicago, which was constructed to include a green roof, smart lighting, energy-efficient HVAC units, and additional eco-friendly features. ​ Contributions & Awards Our culture is focused on quality service and responsibility, and our employees are committed to the communities in which they live and work.
We listen, thoughtfully analyze how our processes, services, and technologies impact their business, and customize solutions that align with their goals. Our long history of innovation enriches these deep customer relationships.
Our customers are at the center of our strategy. We listen, thoughtfully analyze how our processes, services, and technologies impact their business, and customize solutions that align with their goals. Our long history of innovation enriches these deep customer relationships.
Hunt Transport Services, Inc.; the Logistics segment of Knight-Swift Transportation Holdings Inc.; Landstar System, Inc.; RXO, Inc., after its spin-off from XPO Logistics, Inc.; and the Freight segment of Uber Technologies, Inc. ArcBest’s moving services compete with truck rental, self-move, and van line service providers, and several emerging self-move competitors who offer moving and storage container service.
Hunt Transport Services, Inc.; the Logistics segment of Knight-Swift Transportation Holdings Inc.; Landstar System, Inc.; the Truckload Brokerage service offering of RXO, Inc.; and the Freight segment of Uber Technologies, Inc. ArcBest’s moving services compete with truck rental, self-move, and van line service providers, and several emerging self-move competitors who offer moving and storage container service.
Our three-year DEI roadmap is divided into the following four main areas — workforce, workplace, community, and marketplace — each focusing on a different aspect of corporate diversity. ​ We continue to invest in personnel to lead and execute ArcBest’s DEI strategy. We engage leaders in the organization to advance our people and community programs.
Our three-year DEI roadmap is divided into four main areas — workforce, workplace, community, and marketplace — each focusing on a different aspect of corporate diversity. ​ We continue to invest in personnel and partnerships to lead and execute ArcBest’s DEI strategy.
This initiative connects first-term regular Army and Army Reserve soldiers to the civilian workforce by providing two guaranteed job interviews and possible employment after their service in the Army. ​ ArcBest Segment ArcBest received the following recognition for our Asset-Light operations since 2021: ● “2022 leading third-party logistics provider” by Global Trade Magazine in their Leading 3PLs List; ● “Top Freight Brokerage Firms” in Transport Topics for 2022, marking its eighth consecutive year to be listed; ● MoLo was honored in January 2022, for the second consecutive year, as one of the “100 Best Large Companies to Work For in Chicago” as part of Built In’s “2021 Best Places to Work For” awards; ● MoLo was named by Financial Times to the “America’s Fastest Growing Companies” list for 2022; ● 2022 EPA SmartWay Transport Partners recognition for both MoLo and Panther; and ● Two “Quest for Quality” awards by Logistics Magazine in the categories of Household Goods and High Value Goods Carriers and Intermodal Marketing Companies in 2021, marking the seventh time Panther has been recognized and the third time U-Pack has been honored with the award. ​ Available Information ​ We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy and information statements, and other information electronically with the SEC.
This initiative connects first-term regular Army and Army Reserve soldiers to the civilian workforce by providing two guaranteed job interviews and possible employment after their service in the Army. ​ Asset-Light Segment Asset-Light received the following recognitions since 2022: ● “2023 leading third-party logistics provider” by Global Trade Magazine in their Leading 3PLs List for the second consecutive year; ● “Top Freight Brokerage Firms” in Transport Topics for 2023, marking its ninth consecutive year to be listed; ● MoLo was honored in January 2024, for the fourth consecutive year, as part of Built In’s “2024 Best Places to Work For” awards, earning a place in the “Best Places to Work in Chicago” and the “Best Midsize Places to Work in Chicago” categories; ● MoLo was named a “2023 Top Food Chain Provider” by Food Shippers of America; ● MoLo was named by Financial Times to the “America’s Fastest Growing Companies” list for 2022; ● 2023 and 2022 EPA SmartWay Transport Partners recognition for Panther and recognition for MoLo in 2022; and ● Three “Quest for Quality” awards by Logistics Magazine in the categories of 3PL Transportation Management, Household Goods and High Value Goods, and Intermodal Marketing Companies in 2023, marking the eighth time Panther has been recognized and the fourth time U-Pack has been honored with “Quest for Quality” awards. ​ Available Information ​ We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy and information statements, and other information electronically with the SEC.
See Note J to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more specific disclosures regarding the multiemployer pension plans to which ABF Freight contributes, and see the discussion of recent legislation impacting funding for multiemployer pension plans within “Asset-Based Operations” in the “Results of Operations” section of Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of this Annual Report on Form 10-K. ​ ABF Freight operates in a highly competitive industry comprised primarily of nonunion motor carriers.
See Note K to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more specific disclosures regarding the multiemployer pension plans to which ABF Freight contributes, and discussion of legislation impacting funding for multiemployer pension plans. ​ ABF Freight operates in a highly competitive industry comprised primarily of nonunion motor carriers.
As of December 2022, approximately 82% of the Asset-Based segment’s employees were covered under a collective bargaining agreement, the ABF National Master Freight Agreement (the “2018 ABF NMFA”), with the International Brotherhood of Teamsters (the “IBT”), which was ratified on May 10, 2018, by a majority of ABF Freight’s IBT member employees who voted.
As of December 2023, approximately 82% of the Asset-Based segment’s employees were covered under a collective bargaining agreement, the ABF National Master Freight Agreement (the “2023 ABF NMFA”), with the International Brotherhood of Teamsters (the “IBT”), which was ratified on June 30, 2023, by a majority of ABF Freight’s IBT member employees.
The segment competes most directly with nonunion and union LTL carriers, including FedEx Freight Corporation, the LTL reporting segment of FedEx Corporation; the LTL segment of Knight-Swift Transportation Holdings Inc.; Old Dominion Freight Line, Inc.; Saia, Inc.; the LTL reporting segment of TFI International Inc.; XPO Logistics, Inc.; and Yellow Corporation.
The segment competes most directly with nonunion and union LTL carriers, including FedEx Freight Corporation, the LTL reporting segment of FedEx Corporation; the LTL segment of Knight-Swift Transportation Holdings Inc.; Old Dominion 8 Table of Contents Freight Line, Inc.; Saia, Inc.; the U.S. LTL operating segment of TFI International Inc.; and the North American LTL segment of XPO, Inc.
For the year ended December 31, 2022, no single customer accounted for more than 4% of the ArcBest segment’s revenues, and the segment’s ten largest customers, on a combined basis, accounted for approximately 20% of its revenues.
For the year ended December 31, 2023, no single customer accounted for more than 2% of the Asset-Light segment’s revenues, and the segment’s ten largest customers, on a combined basis, accounted for approximately 13% of its revenues.
Through our managed transportation solutions, we partner with customers to create and execute a logistics strategy designed to increase operational efficiencies, reduce costs, and give customers better insights into their supply chains. We also offer fleet maintenance and repair services through FleetNet America ® (“FleetNet”) and household goods moving through U-Pack ® .
Through our managed transportation solutions, we partner with customers to create and execute logistics strategies that increase operational efficiencies, reduce costs, and give customers better insights into their supply chains. We also offer household goods moving through U-Pack ® .
We also conduct an in-house training through our Driver Development Program and host frequent onsite hiring events at critical locations. ​ Diversity, Equity, and Inclusion We embrace and encourage diverse experiences, needs, and perspectives which, in turn, help us create an environment where our employees feel welcome, safe, and valued.
We also conduct in-house training through our Driver Development Program, a six-week paid training program, in certain service center locations, to help drivers earn a CDL-A license, and we host onsite hiring events at critical locations, as needed. ​ Diversity, Equity, and Inclusion We embrace and encourage diverse experiences, needs, and perspectives which, in turn, help us create an environment where our employees feel welcome, safe, and valued.
Beginning with our 2019 report, we have voluntarily published an annual ESG report that details our ESG focal points, including DEI efforts, sustainability approaches, investments in operational efficiencies and innovation, safety standards, and community-based partnerships.
We have voluntarily published an annual report over the last four years that details our responsible business focal points, including DEI efforts, sustainability approaches, investments in operational efficiencies and innovation, safety standards, and community-based partnerships.
Historically, the second and third calendar quarters of each year usually have the highest tonnage levels, while the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, available capacity in the market, the impact of yield initiatives; and the impact of adverse external events or conditions may influence quarterly business levels.
In contrast, the first quarter generally has the lowest, although other factors, including the state of the U.S. and global economies, available capacity in the market, the impact of yield initiatives; and external events or conditions may influence quarterly business levels.
We offer a digital health platform and weight loss program, and we encourage healthy behaviors throughout the year through regular communications, educational sessions, wellness challenges, and other incentives.
We offer a digital health platform, life coaching services, behavioral health support, and a weight loss program, and we encourage healthy behaviors throughout the year through regular communications, educational sessions, wellness challenges, and other incentives. ​ Safety is critical to our business.
As of December 2022, we had approximately 15,700 employees, of which approximately 55% were members of labor unions.
As of December 2023, we had 15,000 employees, of which approximately 56% were members of labor unions.
In some of these states, depending on the specific state’s rules, the guaranty funds may pay excess claims if the insurer cannot pay due to insolvency.
We pay assessments and fees to state guaranty funds in states where we have workers’ compensation self-insurance authority. In some of these states, depending on the specific state’s rules, the guaranty funds may pay excess claims if the insurer cannot pay due to insolvency.
We are also self-insured for each cargo loss up to a $0.3 million deductible for our Asset-Based segment and a $0.1 million deductible for our ArcBest segment, with a $2.0 million retention limit for each auto accident or loss. We maintain insurance that we believe is adequate to cover losses in excess of such self-insured amounts or deductibles.
We are also self-insured for each cargo loss up to a $0.3 million deductible for our Asset-Based segment and a $0.1 million deductible for the majority of our Asset-Light segment, with a $3.0 million retention limit for each auto accident or loss and a 50/50 quota share on $2.0 million in excess of the $3.0 million retention limit on auto losses.
The 2018 ABF NMFA and 6 Table of Contents the related supplemental agreements provide for contributions to multiemployer pension plans frozen at the current rates for each fund, continuation of existing health coverage, and annual contribution rate increases to multiemployer health and welfare plans maintained for the benefit of ABF Freight’s employees who are members of the IBT.
The 2023 ABF NMFA and the related supplemental agreements also provide for annual contribution rate increases to multiemployer health and welfare and pension plans maintained for the benefit of ABF Freight’s employees who are members of the IBT.
This dashboard will be utilized, along with qualitative analysis, to identify areas for improvement, track our Scope 1 (direct) and Scope 2 (indirect) GHG emissions and, in future phases of the ESG dashboard project, provide insights to our customers regarding their supply chains.
This dashboard will be utilized, along with qualitative analysis, to identify areas for improvement, track our Scope 1 (direct) and Scope 2 (indirect) GHG emissions and, in future phases of the sustainability dashboard project, provide insights to our customers supply chains until 2024 when we plan to transition to a third-party platform that will enable us to calculate and disclose Scope 3 emissions in the future.
This dashboard can filter emissions by type, equipment, location, and timeframe, giving us a holistic approach to measuring emissions and enabling us to benchmark performance, identify areas of improvement, and monitor progress. ● Implementation of ArcBest Virtual Agent (AVA), which uses artificial intelligence to quickly schedule shipment pickups, supply tracking information, and address other questions through email, phone, and web chat. ● Implementation of cognitive technologies to improve customer service and optimize our operations, including in the ArcBest segment, where we have developed machine-learning cognitive technologies that use natural language processing and computer vision embedded in the applications our employees use that learn from past interactions and predict customer needs before the customer makes a request — simplifying workflows and driving better decision-making. ● Our City Route Optimization initiative, which has successfully improved efficiencies and lowered costs in the initial pilot locations. ● Enhancement of a capacity sourcing tool that optimizes the utilization of internal equipment capacity while reducing the time it takes to secure external equipment capacity to better meet customer requirements. ​ Typically, freight transportation customers communicate their freight needs, on a shipment-by-shipment basis, by using telephone, email, web, mobile applications, through electronic data interchange (“EDI”) or by API.
This dashboard can filter emissions by type, equipment, location, and timeframe, giving us a holistic approach to measuring emissions and enabling us to benchmark performance, identify areas of improvement, and monitor progress. ● Implementation of ArcBest Virtual Agent (AVA), which uses artificial intelligence (“AI”) to quickly schedule shipment pickups, supply tracking information, and address other questions through email, phone, and web chat. ● Implementation of cognitive technologies to improve customer service and optimize our operations, including in the Asset-Light segment, where we are developing machine-learning cognitive technologies that use natural language processing and computer vision embedded in our applications used by our employees that learn from past interactions and predict customer needs before the customer makes a request — simplifying workflows and driving better decision-making. ● We implemented our City Route Optimization technology at our service centers during 2023, which has successfully improved efficiencies and lowered costs addressing the environmental impact of our fuel emissions in our city pickup and delivery operations through the use of algorithms created using AI and historical data.
We offer LTL freight transportation through the ABF Freight network; truckload freight transportation, including brokerage services offered through MoLo; specialized transportation and premium logistics services, including ground expedite solutions through the Panther brand and household goods moving services under the U-Pack brand; managed transportation solutions; and commercial vehicle maintenance and repair through FleetNet.
We offer LTL freight transportation through the ABF Freight network; truckload freight transportation, including brokerage services offered through MoLo; specialized transportation and premium logistics services, including ground expedite solutions through the Panther brand and household goods moving services under the U-Pack brand; and managed transportation solutions. ArcBest Technologies provides leading-edge technologies that help support our customers and optimize supply chains.
We evaluate compensation to ensure it remains competitive, including insurance and retirement benefits, and we offer programs to support the four pillars of wellness for our employees – physical, financial, emotional/social, and developmental.
We also have a succession planning program to ensure continuity in critical roles, allowing leaders to identify and develop employees for specific career paths. We evaluate compensation to ensure it remains competitive, including insurance and retirement benefits, and we offer programs to support the four pillars of wellness for our employees – physical, financial, emotional/social, and developmental.
The EPA announced it will consider more stringent greenhouse gas standards for heavy-duty vehicles for model years 2027-2029. ​ While fuel consumption and emissions may be reduced under the new standards, emission-related regulatory actions have historically resulted in increased costs of revenue equipment, diesel fuel, and equipment maintenance, and future legislation, if enacted, could result in increases in these and other costs for which the amounts cannot be determined at this time.
The passage of the Inflation Reduction Act of 2022 in August 2022 also seeks to update GHG standards. ​ While fuel consumption and emissions may be reduced under the new standards, emission-related regulatory actions have historically resulted in increased costs of revenue equipment, diesel fuel, and equipment maintenance, and future legislation, if enacted, could result in increases in these and other costs for which the amounts cannot be determined at this time.
Nonunion competitors have a lower fringe benefit cost structure and less stringent labor work rules, and certain carriers also have lower wage rates for their freight-handling and driving personnel. Wage and benefit concessions granted to certain union competitors also allow for a lower cost structure.
Nonunion competitors have a lower fringe benefit cost structure and less stringent labor work rules, and certain carriers also have lower wage rates for their freight-handling and driving personnel. ABF Freight has continued to address the effect of the wage and benefit cost structure on its operating results with the IBT.
Our people are at the heart of our success. They are fueled by the simple notion of finding a way to get the job done, no matter 4 Table of Contents what.
Our integrated logistics approach and innovative technology enable our vision, but it’s our people who ensure our customers’ solutions and capacity needs are met. Our people are at the heart of our success. They are fueled by the simple notion of finding a way to get the job done, no matter 4 Table of Contents what.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf any of these risks or circumstances actually occur, it could materially harm our business, results of operations, financial condition, and cash flows; impair our ability to implement business plans or complete development activities as scheduled; and/or result in a decline in the market price of our common stock. ​ Risks Related to Union Relations ​ If ABF Freight is unable to reach agreement on future collective bargaining agreements, we could be faced with labor inefficiencies, disruptions, or stoppages, or delayed growth, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows. ​ As of December 2022, approximately 82% of our Asset-Based segment’s employees were covered under the 2018 ABF NMFA, the collective bargaining agreement with the IBT that will remain in effect through June 30, 2023.
Biggest changeIf we encounter difficulty in attracting, retaining, and upskilling employees, including qualified drivers, freight-handlers, and professional personnel, we could incur higher recruiting expenses or a loss of business, and our profitability and ability to grow could be adversely affected. ​ As of December 2023, approximately 82% of our Asset-Based segment’s employees were covered under the 2023 ABF NMFA, the collective bargaining agreement with the IBT that will remain in effect through June 30, 2028.
The costs of compliance with current and future environmental laws and regulations may be significant and could adversely impact our results of operations. ​ We routinely transport or arrange for the transportation of hazardous materials and explosives, and, at certain facilities of our Asset-Based operations, we store fuel and oil in underground and aboveground tanks and other containers.
The costs of compliance with current and future environmental laws and regulations may be significant and could adversely impact our results of operations. ​ We routinely transport or arrange for the transportation of hazardous materials and explosives. At certain facilities of our Asset-Based operations, we store fuel and oil in underground and aboveground tanks and other containers.
Even if we were to successfully implement our continuity plans, we may incur substantial expenses and there is no guarantee that our business, financial condition, and results of operations will not be materially impacted. ​ Risks Related to Cybersecurity, Data Privacy, and Information Technology ​ We are dependent on our information technology systems, and a systems failure, perceived or actual data privacy breach, or cybersecurity incident could have a material adverse effect on our business, results of operations, and financial condition. ​ We depend on the proper functioning, availability, and security of our information technology (“IT”) systems, including communications, data processing, financial, and operating systems, as well as proprietary software programs that are integral to the efficient operation of our business.
Even if we were to successfully implement our continuity plans, we may incur substantial expenses and there is no guarantee that our business, financial condition, and results of operations will not be materially impacted. ​ Risks Related to Cybersecurity, Data Privacy, and Information Technology ​ We depend on our Information Technology (“IT”) systems, and a systems failure, perceived or actual data privacy breach, or cybersecurity incident could have a material adverse effect on our business, results of operations, and financial condition. ​ We depend on the proper functioning, availability, and security of our IT systems, including communications, data processing, financial, and operating systems, as well as proprietary software programs that are integral to the efficient operation of our business.
Our self-insurance program for third-party casualty claims is conducted under a federal program administered by a government agency. If the government were to terminate the program or if we were to be excluded from the program, our insurance costs could increase.
Our self-insurance program for third-party automobile casualty claims is conducted under a federal program administered by a government agency. If the government were to terminate the program or if we were to be excluded from the program, our insurance costs could increase.
Although we have an interest rate swap agreement to mitigate a portion of our interest rate risk by effectively converting $50.0 million of borrowings under our Credit Facility, of which $50.0 million remains outstanding at the end of February 2023, from variable-rate interest to fixed-rate interest, changes in interest rates may increase our financing costs related to our Credit Facility, future borrowings against our A/R Securitization, new notes payable or finance lease arrangements, or additional sources of financing.
Although we have an interest rate swap agreement to mitigate a portion of our interest rate risk by effectively converting $50.0 million of borrowings under our Credit Facility, of which $50.0 million remains outstanding at the end of February 2024, from variable-rate interest to fixed-rate interest, changes in interest rates may increase our financing costs related to our Credit Facility, future borrowings against our A/R Securitization, new notes payable or finance lease arrangements, or additional sources of financing.
If acquired operations fail to generate sufficient cash flows, we may incur impairments of goodwill, intangibles, and other assets in the future. ​ The possible risks involved in recent or future acquisitions include, among others: ​ ● potential loss of customers, key employees, and third-party service providers; ● difficulties synchronizing operations of the companies, including the integration of workforces, while continuing to provide consistent, high-quality service to customers; ● unanticipated issues in the assimilation and consolidation of IT, communications, and other systems, including additional systems training and other labor inefficiencies; ● potentially unacceptable qualification requirements for contract carriers or other third-party vendors; ● potentially unfavorable, or adverse changes to, pre-existing contractual relationships; ● delays in consolidation of corporate and administrative infrastructures; ● difficulties and costs of synchronizing our policies, procedures, business culture, and benefits and compensation programs; ● inability to apply and maintain our internal controls and compliance with regulatory requirements; ● difficulties related to additional or unanticipated regulatory and compliance issues; ● adverse tax consequences associated with the acquisition; and ● other unanticipated issues, expenses, and liabilities, including previously unknown liabilities, or legal proceedings which may arise, 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.
If acquired operations fail to generate sufficient cash flows, we may incur impairments of goodwill, intangibles, and other assets in the future. ​ The possible risks involved in acquisitions include, among others: ● potential loss of customers, key employees, and third-party service providers; ● difficulties synchronizing operations of the companies, including the integration of workforces, while continuing to provide consistent, high-quality service to customers; ● unanticipated issues in the assimilation and consolidation of IT, communications, and other systems, including additional systems training and other labor inefficiencies; ● potentially unacceptable qualification requirements for contract carriers or other third-party vendors; 23 Table of Contents ● potentially unfavorable, or adverse changes to, pre-existing contractual relationships; ● delays in consolidation of corporate and administrative infrastructures; ● difficulties and costs of synchronizing our policies, procedures, business culture, and benefits and compensation programs; ● inability to apply and maintain our internal controls and comply with regulatory requirements; ● difficulties related to additional or unanticipated regulatory and compliance issues; ● adverse tax consequences associated with the acquisition; and ● other unanticipated issues, expenses, and liabilities, including previously unknown liabilities, or legal proceedings which may arise, 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.
Manufacturers have also raised prices, in part, to offset their costs of compliance with new tractor engine and emissions system design requirements intended to reduce emissions, which have been mandated by the EPA, the NHTSA, and various state agencies such as those described in “Environmental and Other Government Regulations” within Part I, Item 1 (Business) of this Annual Report on Form 10-K.
Manufacturers have also raised prices, in part, to offset their costs of compliance with new tractor engine and emissions system design requirements intended to reduce emissions, which have been mandated by the EPA, the NHTSA, and various state agencies as described in “Environmental and Other Government Regulations” within Part I, Item 1 (Business) of this Annual Report on Form 10-K.
If we are unable to generate sufficient cash over an extended period of time from operations to fund our capital requirements, we may have to limit our growth, including our ability to invest in technological initiatives that drive business efficiencies; utilize our existing liquidity or enter into additional financing arrangements, including leasing arrangements; or operate our revenue equipment for longer periods resulting in increased maintenance costs, any of which could negatively impact our financial condition and results of operations. ​ Claims expenses or the cost of maintaining our insurance, including medical plans, could have a material adverse effect on our results of operations and financial condition. ​ Claims may be asserted against us for cargo loss or damage, property damage, personal injury, and workers’ compensation related to accidents or events occurring in our operations.
If we are unable to generate sufficient cash over an extended period of time from operations to fund our capital requirements, we may have to limit our growth, including our ability to invest in technological initiatives that drive business efficiencies; utilize our existing liquidity or enter into additional financing arrangements, including leasing arrangements; or operate our revenue equipment for longer periods resulting in increased maintenance costs, any of which could negatively impact our financial condition and results of operations. ​ Claims expenses, the cost of maintaining our insurance, or the loss of our ability to self-insure could have a material adverse effect on our results of operations and financial condition. ​ Claims may be asserted against us for cargo loss or damage, property damage, personal injury, and workers’ compensation related to accidents or events occurring in our operations.
Our annual impairment evaluations for goodwill and indefinite-lived intangible assets in 2022, 2021, and 2020 produced no indication of impairment of the recorded balances; however, there can be no assurance that an impairment will not occur in the future. ​ Given the uncertainties regarding the economic environment, there can be no assurance that our estimates and assumptions made for purposes of impairment evaluations and accounting estimates will prove to be accurate.
Our annual impairment evaluations for goodwill and indefinite-lived intangible assets in 2023, 2022, and 2021 produced no indication of impairment of the recorded balances; however, there can be no assurance that an impairment will not occur in the future. ​ Given the uncertainties regarding the economic environment, there can be no assurance that our estimates and assumptions made for purposes of impairment evaluations and accounting estimates will prove to be accurate.
The success of our approach to technology innovation is dependent upon market acceptance of our solutions and a number of other factors, including our ability to: ​ ● deploy funds and resources for investment in technology and innovation; ● achieve the right balance of strategic investments in existing or developing technology and innovation; ● timely and effectively develop and implement new or enhanced technology, including integration into current operations and interaction with existing systems; ● train our employees to operate the technology and/or achieve appropriate customer, carrier or other desired user adoption of the technology; ● adequately anticipate challenges and respond to unforeseen challenges; ● detect and remedy defects in enhanced or new technology; and ● recover costs of investment through increased business levels, higher prices, improved efficiencies or other means, such as licensing or disposing of the developed solution. ​ 22 Table of Contents If we do not pursue technological advances or engage in innovation, if we fail to successfully or timely develop and deploy enhanced or new technology, or if any enhanced or new technology does not yield the results we expect, or is developed by others, we may be placed at a competitive disadvantage; lose customers; incur higher than anticipated costs, including the possible impact of asset impairment or the write-off of software development costs; or fail to meet the goals of our internal growth strategy, any one of which could materially adversely impact our financial condition and results of operations. ​ Risks Related to Our Business ​ The loss of or reduction in business from one or more large customers, or an overall reduction in our customer base, could have a material adverse effect on our business, results of operations, financial condition, and cash flows. ​ Although we do not have a significant customer concentration, the growth of our business could be materially impacted, and our results of operations and cash flows would be adversely affected if we were to lose all or a portion of the business of some of our large customers.
The success of our approach to technology innovation depends on market acceptance of our solutions and a number of other factors, including our ability to: ● deploy funds and resources for investment in technology and innovation; ● achieve the right balance of strategic investments in existing or developing technology and innovation; ● timely and effectively develop and implement new or enhanced technology, including integration into current operations and interaction with existing systems; ● train our employees to operate the technology and/or achieve appropriate customer, carrier or other desired user adoption of the technology; ● adequately anticipate challenges and respond to unforeseen challenges; ● detect and remedy defects in enhanced or new technology; and ● recover costs of investment through increased business levels, higher prices, improved efficiencies or other means, such as licensing or disposing of the developed technology. ​ If we do not pursue technological advances or engage in innovation, if we fail to successfully or timely develop and deploy enhanced or new technology, or if any enhanced or new technology does not yield the results we expect, or is developed by others, we may be placed at a competitive disadvantage; lose customers; incur higher than anticipated costs, including the possible impact of asset impairment or the write-off of software development costs; or fail to meet the goals of our internal growth strategy, any one of which could materially adversely impact our financial condition and results of operations. ​ Risks Related to Our Business ​ The loss of or reduction in business from one or more large customers, or an overall reduction in our customer base, could have a material adverse effect on our business, results of operations, financial condition, and cash flows. ​ Although we do not have a significant customer concentration, the growth of our business could be materially impacted and our results of operations and cash flows would be adversely affected if we were to lose all or a portion of the business of some of our large customers.
See Note G to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of our financing arrangements. ​ Our Credit Agreement and A/R Securitization contain customary financial covenants and other customary restrictive covenants that may limit our future operations.
See Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of our financing arrangements. ​ Our Credit Agreement and A/R Securitization contain customary financial covenants and other customary restrictive covenants that may limit our future operations.
Service, performance, and safety issues, whether actual or perceived and whether as a result of our actions or those of our third-party service providers, could adversely impact our customers’ image of our brands, including ArcBest, ABF Freight, FleetNet America, Panther, MoLo, and U-Pack, and result in the loss of business or impede our growth initiatives.
Service, performance, and safety issues, whether actual or perceived, and whether as a result of our actions or those of our third-party service providers, could adversely impact our customers’ image of our brands, including ArcBest, ABF Freight, Panther, MoLo, and U-Pack, and result in the loss of business or impede our growth initiatives.
The terms of any future collective bargaining agreements or the inability to agree on acceptable terms for the next contract period may also result in higher labor costs, insufficient operational flexibility, which may increase our operating costs, a work stoppage, the loss of customers, or other events that could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
The terms of any future collective bargaining agreements or the inability to agree on acceptable terms for the next contract period may also result in higher labor costs, insufficient operational flexibility, which may increase our operating costs, a work stoppage, the loss of customers, or other events that could have a material adverse effect on our business, results of operations, financial condition, and cash 27 Table of Contents flows.
If any of the financial institutions that have extended credit 31 Table of Contents commitments to us are adversely affected by economic conditions, disruption to the capital and credit markets, or increased regulation, they may become unable to fund borrowings under their credit commitments or otherwise fulfill their obligations to us, which could have an adverse impact on our ability to borrow additional funds, and thus have an adverse effect on our operations and financial condition.
If any of the financial institutions that have extended credit commitments to us are adversely affected by economic conditions, disruption to the capital and credit markets, or increased regulation, they may become unable to fund borrowings under their credit commitments or otherwise fulfill their obligations to us, which could have an adverse impact on our ability to borrow additional funds, and thus have an adverse effect on our operations and financial condition.
Our third-party capacity providers, including owner operators for portions of our ArcBest segment operations, are also subject to increased regulations and higher equipment and fuel prices, which will, in turn, increase our costs for utilizing their services or may cause certain providers to exit the industry, which could lead to or exacerbate a capacity shortage and further increase our costs of securing third-party services.
Our third-party capacity providers, including owner-operators for portions of our Asset-Light segment operations, are also subject to increased regulations and higher equipment and fuel prices, which will, in turn, increase our costs for utilizing their services or may cause certain providers to exit the industry, which could lead to or exacerbate a capacity shortage and further increase our costs of securing third-party services.
If we are unable to correspondingly increase the prices we charge to our customers, or if we are unable to secure sufficient third-party services to expand our capacity, add additional routes, or meet our commitments to our customers, there could be a material adverse impact on our operations, revenues, profitability and customer relationships. ​ Our ability to secure the services of third-party service providers is affected by many risks beyond our control, including unfavorable pricing conditions; the shortage of quality third-party providers, including owner operators and drivers of contracted carriers for our ArcBest segment; shortages in available cargo capacity of third parties; equipment shortages in the transportation industry, particularly among contracted truckload carriers; changes in government regulations affecting the transportation industry and their related impact on operations, such as hours-of-service rules and the ELD mandate; labor disputes; or a significant interruption in service or stoppage in third-party transportation services.
If we are unable to correspondingly increase the prices we charge to our customers, or if we are unable to secure sufficient third-party services to expand our capacity, add additional routes, or meet our commitments to our customers, there could be a material adverse impact on our operations, revenues, profitability and customer relationships. ​ 28 Table of Contents Our ability to secure the services of third-party service providers is affected by many risks beyond our control, including unfavorable pricing conditions; the shortage of quality third-party providers, including owner-operators and drivers of contracted carriers for our Asset-Light segment; shortages in available cargo capacity of third parties; equipment shortages in the transportation industry, particularly among contracted truckload carriers; changes in government regulations affecting the transportation industry and their related impact on operations, such as hours-of-service rules and the ELD mandate; labor disputes; or a significant interruption in service or stoppage in third-party transportation services.
Interest rates are highly sensitive to many factors, including inflation, governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. Furthermore, future financial market disruptions may adversely affect our ability to refinance, maintain our letter of credit arrangements or, if needed, secure alternative sources of financing.
Interest rates are highly sensitive to many factors, including inflation, governmental monetary 31 Table of Contents policies, domestic and international economic and political conditions and other factors beyond our control. Furthermore, future financial market disruptions may adversely affect our ability to refinance, maintain our letter of credit arrangements or, if needed, secure alternative sources of financing.
Some or all of our expenditures to defend, settle, or litigate these matters may not be covered by insurance or could impact our cost of, and ability to obtain, insurance in the future. Also, litigation can be disruptive to normal business operations and could require a substantial amount of time and effort from our management team.
Some or all of our expenditures to defend, settle, or litigate these matters may not be covered by 29 Table of Contents insurance or could impact our cost of, and ability to obtain, insurance in the future. Also, litigation can be disruptive to normal business operations and could require a substantial amount of time and effort from our management team.
The extent to which we are vulnerable to and may be negatively impacted by supply chain disruptions is uncertain and dependent upon the duration and severity of labor and supply shortages as well as other factors beyond our control, such as extreme weather events, natural disasters, cybersecurity breaches or government shutdowns.
The extent to which we are vulnerable to and may be negatively impacted by supply chain disruptions is uncertain and dependent upon the duration and severity of supply shortages as well as other factors beyond our control, such as extreme weather events, natural disasters, cybersecurity breaches, geopolitical conflicts, or government shutdowns.
Adverse publicity regarding labor relations, legal matters, cybersecurity and data privacy concerns, ESG issues, and similar matters, whether or not justified, could have a negative impact on our reputation and may result in the loss of customers and our inability to secure new customer relationships.
Adverse publicity regarding labor relations, legal matters, cybersecurity and data privacy concerns, social and sustainability issues, and similar matters, whether or not justified, could have a negative impact on our reputation and may result in the loss of customers and our inability to secure new customer relationships.
The loss of our ability to self-insure for any significant period of time could materially increase insurance costs, or we could experience difficulty in obtaining adequate levels of insurance coverage. ​ Our ArcBest segment utilizes third-party service providers who are subject to similar regulatory requirements.
The loss of our ability to self-insure for any significant period of time could materially increase insurance costs, or we could experience difficulty in obtaining adequate levels of insurance coverage. ​ Our Asset-Light segment utilizes third-party service providers who are subject to similar regulatory requirements.
Because we self-insure for a significant portion of our claims exposure and related expenses, our insurance and claims expense may be volatile. If we lose our ability to self-insure for any significant period of time, insurance costs could materially increase, and we could experience difficulty in obtaining adequate levels of insurance coverage.
Because we self-insure for a significant portion of our claims exposure and related expenses, our insurance and claims expense may be volatile. If we lose our ability to self-insure for any significant period of time, insurance costs could materially increase, and we could experience difficulty in obtaining adequate levels of 32 Table of Contents insurance coverage.
These multiemployer plans, established pursuant to the Taft-Hartley Act, are jointly-trusteed and cover collectively bargained employees of multiple unrelated employers. Due to the inherent nature of multiemployer pension 27 Table of Contents plans, there are risks associated with participation in these plans that differ from single-employer plans.
These multiemployer plans, established pursuant to the Taft-Hartley Act, are jointly-trusteed and cover collectively bargained employees of multiple unrelated employers. Due to the inherent nature of multiemployer pension plans, there are risks associated with participation in these plans that differ from single-employer plans.
Severe weather events and natural disasters could disrupt our operations or the operations of our customers or third-party service providers, damage existing infrastructure, destroy our assets, affect regional economies, or disrupt fuel supplies or increase fuel costs, any of which could adversely affect our business levels and operating results. ​ ​
Severe weather events and natural disasters could disrupt our operations or the operations of our customers or third-party service providers, damage existing infrastructure, destroy our assets, affect regional economies, or disrupt fuel supplies or increase fuel costs, any of which could adversely affect our business levels and operating results. ​ ​ 34 Table of Contents
The competitive factors material to our business are the following: ​ 25 Table of Contents ● Our Asset-Based segment competes primarily with nonunion motor carriers who generally have a lower fringe benefit cost structure than union carriers for freight-handling and driving personnel and have greater operating flexibility because they are subject to less-stringent labor work rules.
The competitive factors material to our business are the following: ● Our Asset-Based segment competes primarily with nonunion motor carriers who generally have a lower fringe benefit cost structure than union carriers for freight-handling and driving personnel and have greater operating flexibility because they are subject to less-stringent labor work rules.
As we focus on growing our ArcBest segment, we may also encounter difficulties in adapting our corporate structure or in developing and maintaining effective partnerships among our operating segments, which could hinder our operational, financial, and strategic objectives.
As we focus on growing our Asset-Light segment, we may also encounter difficulties in adapting our corporate structure or in developing and maintaining effective partnerships among our operating segments, which could hinder our operational, financial, and strategic objectives.
Despite our efforts to monitor and develop our IT networks and infrastructure, due to the increasing sophistication of cyber criminals and the development of new techniques for attack, we may be unable to anticipate or promptly detect, or implement adequate protective or remedial measures against, cybersecurity attacks. ​ 21 Table of Contents We engage third parties to provide certain information technology needs, including licensed software, and the inability to maintain these third-party systems or licenses, or any interruptions or failures thereof, could adversely affect our business. ​ Certain of our IT needs are provided or supported by third parties, and we have limited control over the operation, quality, or maintenance of services provided by our vendors or whether they will continue to provide services that are essential to our business.
Despite our efforts to monitor and develop our IT networks and infrastructure, due to the increasing sophistication of cyber criminals and the development of new techniques for attack, we may be unable to anticipate, promptly detect, or timely implement adequate protective or remedial measures against cybersecurity attacks or recover use of our IT networks and infrastructure timely. ​ We engage third parties to provide certain IT needs, including licensed software, and the inability to maintain these third-party systems or licenses, or any interruptions or failures thereof, could adversely affect our business. ​ Certain of our IT needs are provided or supported by third parties, and we have limited control over the operation, quality, or maintenance of services provided by our vendors or whether they will continue to provide services that are essential to our business.
Damage to our reputation and loss of brand equity could reduce demand for our services and, thus, have an adverse effect on our business, results of operations, and financial condition, as well as require additional resources to rebuild our reputation and restore the value of our brands. ​ Our corporate reputation and business depend on a variety of intellectual property rights, and the costs and resources expended to enforce or protect our rights or to defend against infringement claims could adversely impact our business, results of operations, and financial condition. ​ We have registered or are pursuing registration of various marks and designs as trademarks in the United States, including, but not limited to, “ArcBest,” “ABF Freight,” “FleetNet America,” “Panther,” “MoLo,” “U-Pack,” and “More Than Logistics.” For some marks, we also have registered or are pursuing registration in certain other countries.
Damage to our reputation and loss of brand equity could reduce demand for our services and, thus, have an adverse effect on our business, results of operations, financial condition, and the market price of our stock, as well as require additional resources to rebuild our reputation and restore the value of our brands. ​ 24 Table of Contents Our corporate reputation and business depend on a variety of intellectual property rights, and the costs and resources expended to enforce or protect our rights or to defend against infringement claims could adversely impact our business, results of operations, and financial condition. ​ We have registered or are pursuing registration of various marks and designs as trademarks in the United States, including, but not limited to, “ArcBest,” “ABF Freight,” “Panther,” “MoLo,” “U-Pack,” “Vaux,” and “More Than Logistics.” For some marks, we also have registered or are pursuing registration in certain other countries.
Depending upon the timing and level of revenues generated from our growth initiatives, including the acquired operations of MoLo, the related results of operations and cash flows we anticipate from these initiatives and additional service offerings may not be achieved.
Depending upon the timing and level of revenues generated from our growth initiatives, the related results of operations and cash flows we anticipate from these initiatives and additional service offerings may not be achieved.
We regularly evaluate and modify the network of our Asset-Based operations to reflect changes in customer demands and to reconcile the segment’s infrastructure with tonnage levels and the proximity of customer freight, and there can be no assurance that any given network change will result in a material improvement in our Asset-Based segment’s results of operations. ​ 23 Table of Contents 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.
We regularly evaluate and modify the network of our Asset-Based operations to reflect changes in customer demands and to reconcile the segment’s infrastructure with tonnage and shipment levels and the proximity of customer freight, and there can be no assurance that any given network change will result in a material improvement in our Asset-Based segment’s results of operations. ​ We may be unsuccessful in realizing all or any part of the anticipated benefits of acquisitions within the expected time period or at all.
Our tonnage and shipment levels are directly affected by industrial production and manufacturing, distribution, residential and commercial construction, and consumer spending, in each case primarily in the North American economy, and capacity in the trucking industry as well as our customers’ inventory levels and freight profile characteristics.
Our tonnage and shipment levels are directly affected by industrial production and manufacturing, distribution, residential and commercial construction, and consumer spending, in each case primarily in the North 33 Table of Contents American economy, and capacity in the trucking industry as well as our customers’ inventory levels and freight profile characteristics.
Under certain environmental laws, we could be subject to strict liability for any clean-up costs relating to contamination at our past or present facilities and at third-party waste disposal sites, as well as costs associated with the cleanup of accidents involving our vehicles. ​ The transportation of hazardous materials or explosives also involves the risks of, among others, fuel spillage or leakage, environmental damage, a spill or accident involving hazardous substances, and hazardous waste disposal.
Under certain environmental laws, we could be subject to strict liability for any clean-up costs relating to contamination at our past or present facilities, including those occurring prior to ownership or use of such facilities, and at third-party waste disposal sites, as well as costs associated with the cleanup of accidents involving our vehicles. ​ The transportation of hazardous materials or explosives also involves the risks of, among others, fuel spillage or leakage, environmental damage, a spill or accident involving hazardous substances, and hazardous waste disposal.
Our operations and the rates we obtain 33 Table of Contents for our services may also be negatively impacted when economic conditions lead to a decrease in shipping demand, which in turn results in excess equipment capacity in the industry.
Our operations and the rates we obtain for our services may also be negatively impacted when economic conditions lead to a decrease in shipping demand, which in turn results in excess equipment capacity in the industry.
Our customer relationships are generally not subject to long-term contractual obligations or minimum volume commitments, and we cannot ensure that our current customer relationships will continue at the same business levels or at all.
Our customer relationships are generally not subject to 22 Table of Contents long-term contractual obligations or minimum volume commitments, and we cannot ensure that our current customer relationships will continue at the same business levels or at all.
Additionally, if our third-party insurance carriers or underwriters leave 32 Table of Contents the trucking sector, our insurance costs or collateral requirements could materially increase, or we could experience difficulties in finding insurance in excess of our self-insured retention limits.
Additionally, if our third-party insurance carriers or underwriters leave the trucking/logistics sector, our insurance costs or collateral requirements could materially increase, or we could experience difficulties in finding insurance in excess of our self-insured retention limits.
Our IT systems are vulnerable to interruption by adverse weather conditions or natural disasters; power loss; telecommunications failures; terrorist attacks; internet failures and other disruptions to technology, including computer viruses; and other events beyond our control, including cybersecurity attacks and other cyber incidents such as denial of service, system failure, security breach, intentional or inadvertent acts by employees or vendors with access to our systems or data, or disruption by malware.
Our IT systems are vulnerable to interruption by adverse weather conditions or natural disasters; power loss; telecommunications failures; terrorist attacks; internet failures and other disruptions to technology, including 20 Table of Contents computer viruses; and other events beyond our control, including cybersecurity incidents such as denial of service, system failure, security breach, intentional or inadvertent acts by employees or vendors with access to our systems or data, phishing, disruption by malware, or attacks enabled by AI.
In recent years, several insurance companies have completely stopped offering coverage to trucking companies or have significantly reduced the amount of coverage they offer or have significantly raised premiums as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts.
In recent years, many insurance companies have completely stopped offering coverage to trucking and logistics companies or have significantly reduced the amount of coverage they offer or have significantly raised premiums or retention levels as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts.
If a disruption or reduction in transportation services from our rail or other third-party service providers were to occur, we could be faced with business interruptions that could cause us to fail to meet the needs of our customers.
If a disruption or reduction in transportation services from our rail or other third-party service providers were to occur, we could be faced with business interruptions that could cause us to fail to meet the needs of our customers, which could result in loss of business or customer loyalty.
Significant declines in business levels or other changes in cash flow assumptions, including insufficient cash flows from acquired operations, or other factors that negatively impact the fair value of the operations of our reporting units, could result in impairment and noncash write-off of a significant portion of our goodwill and intangible assets, which would have an adverse effect on our financial condition and results of operations. ​ Risks Related to Other External Conditions ​ We are subject to general economic factors and instability in financial and credit markets that are largely beyond our control, any of which could adversely affect our business, financial condition, and results of operations. ​ Our business is cyclical in nature and tends to reflect general economic conditions, which can be impacted by government actions, including suspension of government operations and imposition of trade tariffs.
Significant declines in business levels or other changes in cash flow assumptions, or other factors that negatively impact the fair value of the operations of our reporting units, could result in impairment and noncash write-off of a significant portion of our long-lived assets, goodwill, and intangible assets, which would have an adverse effect on our financial condition and results of operations. ​ Risks Related to Other External Conditions ​ We are subject to general economic factors and instability in financial and credit markets that are largely beyond our control. ​ Our business is cyclical in nature and tends to reflect general economic conditions, which can be impacted by government actions, including changes in tax laws, suspension of government operations and imposition of trade tariffs.
Each of these risks could have a material adverse effect on the operating results of our ArcBest segment. 28 Table of Contents ​ In addition, we may be subject to claims arising from services provided by third parties, particularly in connection with the operations of our ArcBest segment, which are dependent on third-party contract carriers.
Each of these risks could have a material adverse effect on the operating results of our Asset-Light segment. ​ In addition, we may be subject to claims arising from services provided by third parties, particularly in connection with the operations of our Asset-Light segment, which are dependent on third-party contract carriers.
Any problems caused by or impacting these third parties, including cyberattacks and security breaches at a vendor, could result in claims, litigation, losses and/or liabilities and materially adversely affect our ability to provide service to our customers and otherwise conduct our business. ​ A significant portion of our employee population operates under remote and hybrid work arrangements, which may increase demand for IT resources and our exposure to cybersecurity risks, including an increased risk of phishing, unauthorized access to proprietary information or sensitive or confidential data, and other cybersecurity attacks.
Any problems caused by or impacting these third parties, including cybersecurity attacks and security breaches at a vendor, could result in claims, litigation, losses and/or liabilities and materially adversely affect our ability to provide service to our customers and otherwise conduct our business. ​ A portion of our employee population operates under remote and hybrid work arrangements, which has increased demand for IT resources and our exposure to cybersecurity risks, including an increased risk of social engineering attempts, such as phishing, unauthorized access to proprietary information or sensitive or confidential data, and other cybersecurity incidents.
Future contribution rates will be determined through the negotiation process for contract periods following the term of the current collective bargaining agreement. ​ Certain legislative actions which include provisions to improve funding for multiemployer pension plans became effective during 2021 and 2022, as further discussed in Note J to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Future contribution rates will be determined through the negotiation process for contract periods following the term of the current collective bargaining agreement. ​ Certain legislative actions that became effective in recent years include provisions to improve funding for multiemployer pension plans, as further discussed in Note K to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
International security concerns, including the war in Ukraine and other geopolitical tensions, and potential actions or retaliatory measures taken in respect thereof, could continue to have a material adverse effect on global trade and economic activity. ​ Recessionary economic conditions may result in a general decline in demand for freight transportation and logistics services.
International security concerns, including the Russia-Ukraine and Israel-Hamas wars, Red Sea crisis, and other geopolitical tensions, and potential actions or retaliatory measures taken in respect thereof, could continue to have a material adverse effect on global trade and economic activity. ​ Recessionary economic conditions may result in a general decline in demand for freight transportation and logistics services.
From time to time, some original equipment manufacturers (“OEMs”) of tractors and trailers may reduce their manufacturing output due to, for example, lower demand for their products in economic downturns or a shortage of component parts.
From time to time, some OEMs of tractors and trailers may reduce their manufacturing output due to, for example, lower demand for their products in economic downturns or a shortage of component parts.
For example, significant shortages of semiconductor chips and other component parts and supplies, including steel, have forced and may continue to force manufacturers to curtail or suspend their production, leading to a lower supply of tractors and trailers, higher prices, and lengthened trade cycles.
For example, significant shortages of semiconductor chips, as experienced through the first half of 2023, and other component parts and supplies, including steel, have forced and may continue to force manufacturers to curtail or suspend their production, leading to a lower supply of tractors and trailers, higher prices, and lengthened trade cycles.
We may be subject to substantial fines, civil penalties, or third-party initiated lawsuits if we fail to obtain proper certifications or permits or if we do not comply with required environmental inspections and testing provisions.
We may be subject to substantial fines, civil penalties, or litigation if we fail to obtain proper certifications or permits or if we do not comply with required environmental inspections and testing provisions.
We or our subsidiaries could be held directly responsible for these third-party claims and, regardless of ultimate liability, may incur significant costs and expenses in defending these claims or through settlements, even in cases where we believe we have meritorious claims or defenses. We may also incur claims in connection with third-party vendors utilized in FleetNet’s operations.
We or our subsidiaries could be held directly responsible for these third-party claims and, regardless of ultimate liability, may incur significant costs and expenses in defending these claims or through settlements, even in cases where we believe we have meritorious claims or defenses.
Such loss may occur if our customers choose to divert all or a portion of their business with us to one of our competitors; demand pricing concessions for our services; require us to provide enhanced services that increase our costs; or develop their own shipping and distribution capabilities.
Such loss may occur if our customers choose to divert all or a portion of their business with us to our competitors; demand pricing concessions for our services; require us to provide enhanced services at lower prices; or develop their own shipping and distribution capabilities.
Our third-party contract carriers and other vendors may not agree to bear responsibility for such claims, or we may become responsible if they are unable to pay the claims, for example, due to bankruptcy proceedings, and such claims may exceed the amount of our insurance coverage or may not be covered by insurance at all. ​ Our engagement of independent contractor drivers to provide a portion of the capacity for our ArcBest segment exposes us to different risks than we face with our employee drivers.
Our third-party contract carriers and other vendors may not agree to bear responsibility for such claims, or we may become responsible if they are unable to pay the claims, for example, due to bankruptcy proceedings, and such claims may exceed the amount of our insurance coverage or may not be covered by insurance at all. ​ Our engagement of independent contractor drivers to provide a portion of the capacity for our Asset-Light segment exposes us to different risks than we face with our employee drivers. ​ The driver fleet for portions of our Asset-Light segment is made up of independent owner-operators and individuals.
A default under these financing arrangements or changes in regulations that impact the availability of funds, or our borrowing costs could cause a material adverse effect on our liquidity, financial condition, and results of operations. ​ We are affected by the instability in the financial and credit markets that from time to time has created volatility in various interest rates and returns on invested assets.
A default under these financing arrangements or changes in regulations could impact the availability of funds or our borrowing costs. ​ We are affected by the instability in the financial and credit markets, which from time to time has created volatility in various interest rates and returns on invested assets.
The efficient and uninterrupted operation of our IT systems depends upon the internet, electric utility providers, and telecommunications providers. The IT systems of our third-party service providers are vulnerable to interruption by adverse weather conditions or natural disasters, power loss, telecommunications failures, terrorist attacks, internet failures, computer viruses, and other events beyond our control.
The IT systems and operations of our third-party service providers are vulnerable to interruption by adverse weather conditions or natural disasters, power loss, telecommunications failures, terrorist attacks, internet failures, computer viruses, security breaches, and other events beyond our control.
We do not have insurance coverage specific to losses resulting from a pandemic. ​ In the event of worsening conditions in the severity and spread of COVID-19 or another pandemic or other public health crisis that adversely affects the U.S. and global economies, our results of operations, financial condition, and cash flows could be adversely impacted, and many of the other risks discussed in this Risk Factors section may be heightened. ​ 20 Table of Contents We, or the third parties who provide services for us, may be adversely affected by external events for which our business continuity plans may not adequately prepare us. ​ The occurrence of severe weather, natural disasters, health epidemics, acts of war or terrorism, military conflicts (such as the war between Russia and Ukraine), and other adverse external events or conditions that impact us or the operations of third parties who provide services for us have the potential to significantly impact our ability to conduct business.
In the event of another pandemic or other public health crisis that adversely affects the U.S. and global economies, our results of operations, financial condition, and cash flows could be adversely impacted, and many of the other risks discussed in this Risk Factors section may be heightened. ​ We, or the third parties who provide services for us, may be adversely affected by external events for which our business continuity plans may not adequately prepare us. ​ The occurrence of severe weather, natural disasters, health epidemics, acts of war or terrorism, military conflicts (such as the Russia-Ukraine and Israel-Hamas wars and Red Sea crisis), trade restrictions, and other adverse external events or conditions that impact us or the operations of third parties who provide services for us have the potential to significantly impact our ability to conduct business.
Our insurance premiums or deductibles could increase in the future due to market conditions or if our claims experience worsens. The impact of climate change, including its effect on weather-related events which may disrupt our operations or damage our property and equipment, may increase our claims liabilities and the cost to obtain adequate insurance coverage for our business.
The impact of climate change, including its effect on weather-related events which may disrupt our operations or damage our property and equipment, may increase our claims liabilities and the cost to obtain adequate insurance coverage for our business.
Our obligation to pay third-party service providers is not contingent upon payment from our customers, and we extend unsecured credit to these customers, which increases our exposure to uncollectible receivables. ​ Inflation and rising interest rates may adversely affect us by increasing costs beyond what we can recover through price increases . ​ Inflation in the United States was at its highest level in 40 years by the end of June 2022 and although the inflation rate slowed slightly during the second half of 2022, it remains above market forecasts as of January 2023.
Our obligation to pay third-party service providers is not contingent upon payment from our customers, and we extend unsecured credit to these customers, which increases our exposure to uncollectible receivables. ​ Inflation and high interest rates may adversely affect us by increasing costs beyond what we can recover through price increases. ​ Inflation in the United States was at its highest level in 40 years by the end of June 2022 and has remained above normal and historical levels throughout 2023 and into 2024.
When market forces result in demand outstripping supply, we have and may continue to face reduced supply levels and/or increased acquisition costs for new tractors or trailers, as well as related parts and services, for our Asset-Based operations, which could have a material adverse effect on our business and growth initiatives, results of operations, financial condition, and cash flows. ​ Fuel shortages, changes in fuel prices, and the inability to collect fuel surcharges could have a material adverse effect on our business, results of operations, financial condition, and cash flows. ​ The transportation industry is dependent upon the availability of adequate fuel supplies.
Component suppliers may either reduce production or be unable to increase production to meet OEM demand, creating periodic difficulty for OEMs to react in a timely manner to increased demand for new equipment and/or increased demand for replacement components as economic conditions change. ​ When market forces result in demand outstripping supply, we have and may continue to face reduced supply levels and/or increased acquisition costs for new tractors or trailers, as well as related parts and services, for our Asset-Based operations, which could have a material adverse effect on our business and growth initiatives, results of operations, financial condition, and cash flows. ​ 26 Table of Contents Fuel shortages, changes in fuel prices, or the inability to collect fuel surcharges could have a material adverse effect on our business, results of operations, financial condition, and cash flows. ​ The transportation industry is dependent upon the availability of adequate fuel supplies.
As technology improves, our customers may find alternatives to our services to meet their freight transportation and logistics needs.
With industry advancements in technology, our customers may find alternatives to our services to meet their freight transportation and logistics needs.
Any of our intellectual property rights related to trademarks, trade secrets, domain names, copyrights, patents, or other intellectual property, whether owned or licensed, could be challenged or invalidated, or misappropriated or infringed upon, by third parties.
Competitors or other third parties could attempt to reproduce or reverse-engineer our patented technologies, or we could be subject to third-party claims of infringement. Any of our intellectual property rights related to trademarks, trade secrets, domain names, copyrights, patents, or other intellectual property, whether owned or licensed, could be challenged or invalidated, or misappropriated or infringed upon, by third parties.
Estimates made by the states and the surety companies of our future exposure for our self-insurance liabilities could influence the amount and cost of additional letters of credit and surety bonds required to support our self-insurance program, and we may be required to maintain secured surety bonds in the future, which could increase the amount of our cash equivalents and short-term investments restricted for use and unavailable for operational or capital requirements. ​ Future impairment, if any, of our goodwill and intangibles could adversely affect our earnings. ​ Our goodwill and intangible assets are primarily associated with acquisitions in the ArcBest segment.
Estimates made by the states and the surety companies of our future exposure for our self-insurance liabilities could influence the amount and cost of additional letters of credit and surety bonds required to support our self-insurance program, and we may be required to maintain secured surety bonds in the future, which could increase the amount of our cash equivalents and short-term investments restricted for use and unavailable for operational or capital requirements. ​ Future impairment, if any, of our long-lived assets and our goodwill and intangible assets could adversely affect our earnings. ​ Long-lived assets, including operating right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.
A prolonged labor shortage or significant labor inefficiencies could have a material adverse effect on our results of operations, financial condition, and cash flows as a result of lower levels of service, including timeliness, productivity and/or quality of service.
If such additional costs are disproportionate to our business levels, they may adversely impact our operating results. A prolonged labor shortage or significant labor inefficiencies could have a material adverse effect on our results of operations, financial condition, and cash flows as a result of lower levels of service, including timeliness, productivity and/or quality of service.
It is difficult to predict how our efforts with respect to social and sustainability matters will be evaluated by current and prospective investors or by our customers or business partners. ​ 24 Table of Contents Our business, including the self-service moving offerings provided under our U-Pack brand, is increasingly dependent on the internet for attracting and securing customers, and the possibility that fraudulent behavior may confuse or deceive customers heightens the risk of damage to our reputation and increases the time and expense required to protect and maintain the integrity of our brands.
It is difficult to predict how our efforts with respect to sustainability matters will be evaluated by current and prospective investors or by our customers or business partners, and our industry may be generally disfavored by the investing community at large. ​ Our business is increasingly dependent on the internet for attracting and securing customers, and the possibility that fraudulent behavior may confuse or deceive customers, including through use of AI, heightens the risk of damage to our reputation and increases the time and expense required to protect and maintain the integrity of our brands.
Although we have business continuity plans in place, including an emergency succession plan, there is no guarantee that our plans have adequately addressed each risk and can be successfully implemented.
Although we have business continuity plans in place, there is no guarantee that our plans have adequately addressed each known risk or every possible risk and can be successfully or timely implemented.
In a highly inflationary environment, we may be unable to secure adequate price increases for our services to offset the increases in our operating costs, which could reduce our operating margins. ​ Our business and results of operations could be impacted by seasonal fluctuations, adverse weather conditions, natural disasters, and climate change. ​ Our operations are, and may in the future be, impacted by seasonal fluctuations and, at times, inclement weather conditions that affect tonnage and shipment levels, service events, demand for our services, and operating costs, which in turn may impact our revenues and operating results, as further described in “Seasonality” within Part I, Item 1 (Business) of this Annual Report on Form 10-K.
Additionally higher inflation and interest rates could impact consumer demand, which could adversely affect our financial condition and operating results as tonnage and shipment levels decrease. ​ Our business and results of operations could be impacted by seasonal fluctuations, adverse weather conditions, natural disasters, and climate change. ​ Our operations are, and may in the future be, impacted by seasonal fluctuations and, at times, inclement weather conditions that affect employee working conditions, tonnage and shipment levels, demand for our services, and operating costs, which in turn may impact our revenues and operating results, as further described in “Seasonality” within Part I, Item 1 (Business) of this Annual Report on Form 10-K.
Our performance is affected by recessionary economic cycles, inflation, labor and supply shortages, downturns in customers’ business cycles, and changes in their business practices.
Our performance is affected by recessionary economic cycles, inflation, labor and supply shortages, downturns in customers’ business cycles, and changes in their business practices, which may be impacted by factors such as higher inflation and interest rates.
We may be unable to generate sufficient revenue or earnings from the operations of MoLo, 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.
The cost, integration, and performance of any such acquisition may adversely affect our business, results of operations, financial condition, and cash flows. ​ We may be unable to generate sufficient revenue or earnings from the operations of MoLo, which we acquired on November 1, 2021, 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.
If customers select transportation service providers based on price alone rather than the total value offered, we may be unable to maintain our operating margins or to maintain or grow tonnage levels. ● Enhanced visibility of capacity options in the marketplace is increasing and customers may seek bids from multiple carriers for their shipping needs, which may generally depress prices or result in the loss of some business to our competitors. ● In a tight capacity market, as experienced in the first half of 2022, customer demand may exceed available carrier capacity in the industry.
If customers select 25 Table of Contents transportation service providers based on price alone rather than the total value offered, we may be unable to maintain our operating margins or to maintain or grow tonnage levels. ● Enhanced visibility of capacity options in the marketplace is increasing, and customers may seek bids from multiple carriers for their shipping needs, which may generally depress prices or result in the loss of some business to our competitors. ● In an excess capacity market, we may be unable to maintain the higher market-driven prices we obtained for our services in the tighter capacity environment, especially if there is a prolonged recessionary period in the freight environment as there was during 2023.
In periods of declining fuel prices, fuel surcharge percentages also decrease, which negatively impacts the total billed revenue per hundredweight or revenue per shipment measure and, consequently, our revenues, and the revenue decline may be disproportionate to the corresponding decline in our fuel costs. ​ Risks Related to Employees and Benefits ​ If we have difficulty attracting, retaining and upskilling employees throughout the Company, we could be faced with labor inefficiencies or delayed growth, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows. ​ During recent years, we experienced, and continue to experience in certain markets, challenges with hiring an adequate number of qualified drivers, freight-handlers, and professional personnel to meet increases in demand due to numerous factors, including the continuing impact of the COVID-19 pandemic, prevailing wage rates, health and other insurance costs, and inflation.
In periods of declining fuel prices, fuel surcharge percentages also decrease, which negatively impacts the total billed revenue per hundredweight or revenue per shipment measure and, consequently, our revenues, and the revenue decline may be disproportionate to the corresponding decline in our fuel costs, as experienced in 2023. ​ Risks Related to Employees and Benefits ​ Difficulty attracting, retaining and upskilling employees throughout the Company, or if ABF Freight is unable to reach agreement on future collective bargaining agreements, could result in labor inefficiencies, disruptions, stoppages, or delayed growth. ​ During recent years, we experienced, and continue to experience in certain markets, challenges with hiring an adequate number of qualified drivers, freight-handlers, and professional personnel to meet increases in demand due to numerous factors.
We have experienced, and may continue to experience, an inability to obtain, or delays in the delivery of, equipment necessary for operations, including tractors, trailers, and other equipment, as a result of manufacturing delays, supply chain disruptions, and parts shortages.
Although there have been recent signs of normalizing in the manufacturing capacity of original equipment manufacturers (“OEMs”), we have experienced, and may continue to experience, an inability to obtain, or delays in the delivery of, equipment necessary for operations, including tractors, trailers, and other equipment, as a result of manufacturing delays, supply chain disruptions, parts shortages, and equipment design changes due to upcoming federal and/or state emissions standards.
Numerous factors could adversely impact our ability to compete effectively in the transportation and logistics industry, retain our existing customers, or attract new customers, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
We also compete with domestic and global logistics service providers, including asset-light logistics companies, integrated logistics companies, and third-party freight brokers that compete in one or more segments of the transportation industry. ​ Numerous factors could adversely impact our ability to compete effectively in the transportation and logistics industry, retain our existing customers, or attract new customers, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
Significant increases in fuel prices or fuel taxes resulting from these or other economic or regulatory changes that are not offset by base freight rate increases or fuel surcharges could have an adverse impact on our results of operations. ​ Our Asset-Based segment and certain operations of our ArcBest segment assess a fuel surcharge based on an index of national diesel fuel prices.
Significant increases in fuel prices or fuel taxes resulting from these or other economic or regulatory changes that are not offset by base freight rate increases or fuel surcharges could have an adverse impact on our results of operations. ​ Additionally, we pay independent contractor drivers a fuel surcharge that increases with the increase in fuel prices.
Also see Item 3 (Legal Proceedings) included in Part I of this Annual Report on Form 10-K for disclosure of a legal matter for which we believe a loss, that could be material to our financial condition, results of operations, or cash flows, is reasonably possible. ​ Our business operations are subject to numerous governmental regulations in the transportation industry, and costs of compliance with, or liability for violations of, existing or future regulations could have a material adverse effect on our financial condition and results of operations. ​ Various international, federal, state and local agencies exercise broad regulatory powers over the transportation industry, such as those described in “Environmental and Other Government Regulations” within Part I, Item 1 (Business) of this Annual Report on Form 10-K.
New legal claims, or subsequent developments related to known legal claims, asserted against us may affect our assessment and estimates of our recorded legal reserves and may require us to make payments in excess of our reserves, which could have a material adverse effect on our financial condition or results of operations. ​ Our business operations are subject to numerous governmental regulations in the transportation industry, and costs of compliance with, or liability for violations of, existing or future regulations could have a material adverse effect on our financial condition and results of operations. ​ Various international, federal, state and local agencies exercise broad regulatory powers over the transportation industry, such as those described in “Environmental and Other Government Regulations” within Part I, Item 1 (Business) of this Annual Report on Form 10-K.
If we are unable to successfully adapt and implement appropriate measures in response to these changes, our operating results could be adversely affected. ​ Increased prices for, or decreases in the availability of, new revenue equipment, as well as higher costs of equipment-related operating expenses, could adversely affect our results of operations and cash flows. ​ In recent years, manufacturers have raised the prices of new revenue equipment significantly due to inflation, increased demand for or decreased supply of such equipment, parts shortages, manufacturing disruptions, and increased costs of materials and labor.
If we are unable to successfully adapt and implement appropriate measures in response to these changes, our operating results could be adversely affected. ​ Increased prices for, or decreases in the availability of, equipment, including new revenue equipment, as well as higher costs of related operating expenses, could adversely affect our results of operations and cash flows. ​ In recent years, OEMs have significantly raised the prices of equipment, including new revenue equipment, due to supply chain disruptions and other challenges beyond our control, including, but not limited to geopolitical conflicts and significant weather events, in addition to increased costs of materials and labor, above normal inflation levels, and high interest rates, which impact equipment financing.
Compliance with laws and regulations related to climate risk may also increase our exposure to litigation or governmental investigations or proceedings. We may also incur significant costs to comply with increased regulation regarding environmental monitoring and reporting requirements.
Compliance with laws and regulations related to climate risk may also increase our exposure to litigation or governmental investigations or proceedings.
If a high number of our employees were to contract COVID-19 or another disease or illness or were quarantined, our operations and customer service levels, and, consequently, our results of operations, could be adversely impacted.
Additionally, if a high number of our employees were to contract a virus, disease or illness or were quarantined, our operations and customer service levels and, consequently, our results of operations, could be adversely impacted. We do not have insurance coverage specific to losses resulting from a pandemic.
Our efforts to obtain, enforce, or protect our proprietary rights, or to defend against third-party infringement claims, may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our corporate reputation, business, results of operations, and financial condition. ​ Risks Related to Our Industry ​ A nationwide or global disruption in the supply chain could increase volatility in freight volumes and materially impact our business. ​ Our business may be materially impacted by the cyclical nature of the supply chain industry which has been exacerbated due to an ongoing shortage of truck drivers, material scarcity, port and rail congestion, digital transformation, and changes in consumer spending due to record inflation and rising interest rates, among other challenges following the outbreak of the COVID-19 pandemic.
Our efforts to obtain, enforce, or protect our proprietary rights, or to defend against third-party infringement claims, may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our corporate reputation, business, results of operations, and financial condition. ​ Risks Related to Our Industry ​ A nationwide or global disruption in the supply chain could increase volatility in freight volumes and materially impact our business. ​ Our business may be materially impacted by the cyclical nature of the supply chain industry due to changes in consumer spending related to inflation and higher interest rates and, more recently, due to disruption to two crucial trade corridors – the Panama Canal as a result of low rain levels and the Suez Canal as a result of geopolitical tensions in the Middle East, among other challenges affecting our industry.
In certain market conditions, we may have to accept more freight from freight brokers, where freight rates are typically lower, or we may be forced to incur more non-revenue miles to obtain loads. Conversely, during times of higher shipping demand, tight market capacity may negatively impact the service levels we are able to provide to our customers.
In certain market conditions, we may have to accept more freight from freight brokers, where freight rates are typically lower, or we may be forced to incur more non-revenue miles to obtain loads.
A significant increase or rapid fluctuation in fuel prices could cause the fuel surcharge we pay to independent contractors to be higher than the revenue we receive under our customer fuel surcharge programs, which could adversely impact the results of operations of our ArcBest segment. ​ If the independent contractors with which we contract are deemed by regulators or judicial process to be employees, or if we experience operational or regulatory issues related to our use of these contract drivers, our financial condition, results of operations, and cash flows could be adversely affected. ​ Class actions and other lawsuits have arisen in the transportation and logistics industry seeking to reclassify independent contractor drivers as employees for a variety of purposes, including workers’ compensation, wage-and-hour, and health care coverage.
Furthermore, as these independent owner-operators and individuals are third-party service providers, rather than our employees, they may decline loads of freight from time to time, which may impede our ability to deliver freight in a timely manner or result in increased expenses to do so. ​ If the independent contractors with which we contract are deemed by regulators or judicial process to be employees, or if we experience operational or regulatory issues related to our use of these contract drivers, our financial condition, results of operations, and cash flows could be adversely affected. ​ Class actions and other lawsuits have arisen in the transportation and logistics industry seeking to reclassify independent contractor drivers as employees for a variety of purposes, including workers’ compensation, wage-and-hour, and health care coverage.
If we are unable to generate sufficient cash from operations, our growth and profitability could be limited due to significant ongoing capital expenditure requirements. ​ We depend on cash flows from operations, borrowings under our Credit Facility or our A/R Securitization, and operating and financing leases to fund our capital expenditures.
If we are unable to generate sufficient cash from operations, our growth and profitability could be limited due to significant ongoing capital expenditure requirements. ​ Our business requires significant capital expenditures, which we finance through various sources, including cash flows from operations, borrowings under our revolving credit facility or our accounts receivable securitization program, and notes payable.
If the operations of these providers are impacted to the extent that a shortage of quality third-party service providers occurs, or if we experience a shortage of quality third-party vendors utilized in FleetNet’s operations, there could be a material adverse effect on the business and results of operations of our ArcBest and FleetNet segments.
If the operations of these providers are impacted to the extent that a shortage of quality third-party service providers occurs, there could be a material adverse effect on the business and results of operations of our Asset-Light segment. Also, activities by these providers that violate applicable laws or regulations could result in governmental or third-party actions against us.
Such liabilities and costs, to the extent they arise, could have a material adverse effect on the results of operations and financial condition of our ArcBest segment. ​ Risks Related to Legal and Regulatory Matters ​ We are subject to litigation risks, and at times may need to initiate litigation, which could result in significant costs and have other material adverse effects on our business, results of operations, and financial condition. ​ The nature of our business exposes us to the potential for various claims and litigation, including class-action litigation and other legal proceedings brought by customers, suppliers, employees, or other parties, related to labor and employment, competitive matters, personal injury, property damage, cargo claims, safety and contract compliance, environmental 29 Table of Contents liability, and other matters.
In the event of such reclassification of our owner-operators, we could be exposed to various liabilities and additional costs, for both future and prior periods, under federal, state, and local tax laws, and workers’ compensation, unemployment benefits, labor, and employment laws, as well as potential liability for penalties and interest and under vicarious liability principles. ​ Risks Related to Legal and Regulatory Matters ​ We are subject to litigation risks, and at times may need to initiate litigation, which could result in significant costs and have other material adverse effects on our business, results of operations, and financial condition. ​ The nature of our business exposes us to the potential for various claims and litigation, including class-action litigation and other legal proceedings brought by customers, suppliers, employees, or other parties, related to labor and employment, including wage and hour claims; competitive matters; personal injury; property damage; cargo claims; safety and contract compliance; environmental liability; and other matters, such as the matters (if any) described in Item 3 (Legal Proceedings) included in Part I of, or otherwise disclosed in, this Annual Report on Form 10-K.
At times, competitors may adopt service or trade names or logos or designs similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.
At times, competitors may adopt service or trade names, logos, or designs similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. We have obtained or are pursuing patent protection on internally developed and certain purchased technology, including equipment and process patents in connection with Vaux.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAsset-Based distribution centers are as follows: ​ ​ ​ ​ ​ ​ No. of Doors Owned: ​ ​ ​ Dayton, Ohio 330 Carlisle, Pennsylvania 333 Winston-Salem, North Carolina 150 Atlanta, Georgia 226 South Chicago, Illinois 274 North Little Rock, Arkansas 196 Dallas, Texas 196 Albuquerque, New Mexico 85 ​ ​ ​ ​ Leased from nonaffiliate: ​ ​ ​ Kansas City, Missouri 81 Salt Lake City, Utah 89 ​ Asset-Light Operations ​ The ArcBest segment owns a general office building and service bay in Medina, Ohio and leases six additional office and warehouse locations, including an office and warehouse location in Sparks, Nevada and an office location in Chicago, Illinois.
Biggest changeAsset-Based distribution centers are as follows: ​ ​ ​ ​ ​ ​ No. of Doors Owned: ​ ​ ​ Carlisle, Pennsylvania 333 ​ Dayton, Ohio 330 South Chicago, Illinois 274 ​ Kansas City, Missouri 252 Atlanta, Georgia 226 North Little Rock, Arkansas 196 Dallas, Texas 196 Winston-Salem, North Carolina 150 ​ Albuquerque, New Mexico 85 ​ ​ ​ ​ Leased from nonaffiliate: ​ ​ ​ Salt Lake City, Utah 89 ​ Asset-Light Segment ​ The Asset-Light segment owns a general office building and service bay in Medina, Ohio and leases five additional office and warehouse locations, including an office and warehouse location in Sparks, Nevada and an office location in Chicago, Illinois. ​ ​
The Company also leases an office building in Fort Smith, Arkansas for certain subsidiary functions. ​ Asset-Based Segment ​ The Asset-Based segment operates out of its general office building located in Fort Smith, Arkansas and 239 revenue producing facilities, 10 of which also serve as distribution centers.
The Company also leases an office building and an innovation lab in Fort Smith, Arkansas for certain subsidiary functions. ​ Asset-Based Segment ​ The Asset-Based segment operates out of its general office building located in Fort Smith, Arkansas and 240 revenue producing facilities, 10 of which also serve as distribution centers.
ITEM 2. PROPERTIES ​ The Company believes that its facilities, including owned and leased properties, are suitable and adequate and that the facilities have sufficient capacity to meet current business requirements. The Company owns an office facility in Fort Smith, Arkansas, which provides space for corporate and certain subsidiary functions.
ITEM 2. PROPERTIES ​ The Company believes that its facilities, including owned and leased properties, are suitable and adequate and that the facilities have sufficient capacity to meet current business requirements. The Company owns two office facilities in Fort Smith, Arkansas, which provide space for corporate and certain subsidiary functions.
The Company owns 110 of these Asset-Based segment facilities and leases the remainder from nonaffiliates.
The Company owns 114 of these Asset-Based segment facilities and leases the remainder from nonaffiliates.
Removed
The FleetNet segment owns its office located in Cherryville, North Carolina. ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company will pursue recovery for its losses, if any, against all available sources, including, but not limited to, insurance and any potentially responsible third parties. ​ For additional information related to our environmental and legal matters, see Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ ITEM 4.
Biggest changeThe Company will pursue recovery for its losses, if any, against all available sources, including, but not limited to, insurance and any potentially responsible third parties. ​ For additional information related to our environmental and legal matters and other events, see Note P to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ ​ 37 Table of Contents ITEM 4.
Although a range of reasonably possible losses for this matter cannot be estimated at this time, it is reasonably possible that such amounts could be material to the Company’s financial condition, results of operations, or cash flows.
The Company intends to vigorously defend against these lawsuits. Although a range of reasonably possible losses for this matter cannot be estimated at this time, it is reasonably possible that such amounts could be material to the Company’s financial condition, results of operations, or cash flows.
The accident occurred in June 2021 in Baxter County, Alabama, and the cases are pending in the state and federal courts therein situated. The accident occurred prior to the Company’s acquisition of MoLo. The lawsuits allege that MoLo was negligent in the selection of the motor carrier involved in the accident. The Company intends to vigorously defend against these lawsuits.
The accident occurred in June 2021 in Baxter County, Alabama, and the cases are pending in the state and federal courts therein situated. The accident occurred prior to the Company’s acquisition of MoLo. The lawsuits allege that MoLo was negligent in the selection of the motor carrier involved in the accident. The claimants are seeking compensatory and punitive damages.
MINE SAFETY DISCLOSURE S ​ Not applicable. 35 Table of Contents PART I I ​
MINE SAFETY DISCLOSURE S ​ Not applicable. ​ ​ PART I I ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the three months ended December 31, 2022, the Company purchased 188,547 shares, leaving $26.5 million remaining under the Company’s share repurchase programs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Approximate Dollar ​ ​ Total Number ​ Average ​ as Part of Publicly ​ Value of Shares that ​ ​ of Shares ​ Price Paid ​ Announced ​ May Yet Be Purchased ​ Purchased Per Share (1) Program Under the Program ​ ​ (in thousands, except share and per share data) 10/1/2022-10/31/2022 — $ — — $ 41,389 ​ 11/1/2022-11/30/2022 96,289 ​ 79.48 96,289 $ 33,736 ​ 12/1/2022-12/31/2022 92,258 ​ 78.39 92,258 $ 26,504 ​ Total 188,547 $ 79.00 188,547 ​ ​ ​ ​ (1) Represents the weighted average price paid per common share including commission. ​ ​ ​ ITE M 6.
Biggest changeIn February 2024, the Board of Directors reauthorized the share repurchase program and increased the total amount available for purchases of the Company’s common stock under the share repurchase program to $125.0 million. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Maximum ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Approximate Dollar ​ ​ ​ Total Number ​ Average ​ as Part of Publicly ​ Value of Shares that ​ ​ ​ of Shares ​ Price Paid ​ Announced ​ May Yet Be Purchased ​ ​ ​ Purchased Per Share (1) Program Under the Program ​ ​ ​ (in thousands, except share and per share data) ​ 10/1/2023-10/31/2023 ​ 128,766 $ 97.68 128,766 $ 46,536 ​ 11/1/2023-11/30/2023 ​ 55,297 ​ 117.54 55,297 $ 40,036 ​ 12/1/2023-12/31/2023 ​ 58,189 ​ 112.87 58,189 $ 33,468 ​ Total ​ 242,252 $ 105.86 242,252 ​ ​ ​ ​ (1) Represents the weighted average price paid per common share including commission. ​ ​ ITE M 6.
A substantially greater number of holders of ArcBest Corporation common stock are "street name" or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. ​ On January 30, 2023, the board of directors of the Company (the “Board of Directors”) declared a quarterly dividend of $0.12 per share to stockholders of record as of February 14, 2023.
A substantially greater number of holders of ArcBest Corporation common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. ​ On February 2, 2024, the board of directors of the Company (the “Board of Directors”) declared a quarterly dividend of $0.12 per share to stockholders of record as of February 16, 2024.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIE S ​ Market Information, Dividends and Holders ​ The common stock of ArcBest Corporation trades on the Nasdaq Global Select Market under the symbol “ARCB.” As of February 20, 2023, there were 24,258,338 shares of the Company’s common stock outstanding, which were held by 182 stockholders of record.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIE S ​ Market Information, Dividends and Holders ​ The common stock of ArcBest Corporation trades on the Nasdaq Global Select Market under the symbol “ARCB.” As of February 19, 2024, there were 23,520,701 shares of the Company’s common stock outstanding, which were held by 177 stockholders of record.
Removed
In April 2022, the Board of Directors increased the total amount available for purchases of the Company’s common stock under the share repurchase program to $75.0 million. ​ On November 1, 2021, the Board of Directors authorized the Company to enter into an accelerated share repurchase program (“ASR”).
Added
In February 2023, the Board of Directors reauthorized the program and increased the total amount available for purchases of the Company’s common stock under the program to $125.0 million. ​ During 2023, the Company purchased 930,754 shares of its common stock for an aggregate cost of $91.5 million, including 501,146 shares for an aggregate cost of $47.6 million under Rule 10b5-1 plans, which allowed for stock repurchases during closed trading windows.
Removed
The fixed-dollar ASR, which was executed on November 2, 2021 with a third-party financial institution to effect an accelerated repurchase of $100.0 million of the Company’s common stock, was settled in January 2022. ​ During 2022, the Company purchased 822,106 shares of its common stock for an aggregate cost of $65.0 million and purchased 214,763 shares to settle the remaining $25.0 million under the ASR.
Added
During the three months ended December 31, 2023, the Company purchased 242,252 shares, leaving $33.5 million remaining under the Company’s share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

182 edited+102 added−76 removed57 unchanged
Biggest changeAdjusted EBITDA should not be construed as a better measurement than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP. ​ Asset-Light Adjusted EBITDA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ ​ ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ArcBest Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income (1) ​ $ 52,725 ​ $ 46,397 ​ $ 9,655 ​ Depreciation and amortization (2) ​ ​ 20,730 ​ ​ 11,387 ​ ​ 9,714 ​ Change in fair value of contingent consideration (3) ​ ​ 18,300 ​ ​ — ​ ​ — ​ Gain on sale of subsidiary (4) ​ ​ (402) ​ ​ (6,923) ​ ​ — ​ Adjusted EBITDA ​ $ 91,353 ​ $ 50,861 ​ $ 19,369 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FleetNet Segment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income (1) ​ $ 5,825 ​ $ 4,544 ​ $ 3,367 ​ Depreciation and amortization (2) ​ ​ 1,880 ​ ​ 1,661 ​ ​ 1,622 ​ Adjusted EBITDA ​ $ 7,705 ​ $ 6,205 ​ $ 4,989 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Asset-Light ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income (1) ​ $ 58,550 ​ $ 50,941 ​ $ 13,022 ​ Depreciation and amortization (2) ​ ​ 22,610 ​ ​ 13,048 ​ ​ 11,336 ​ Change in fair value of contingent consideration (3) ​ ​ 18,300 ​ ​ — ​ ​ — ​ Gain on sale of subsidiary (4) ​ ​ (402) ​ ​ (6,923) ​ ​ — ​ Adjusted EBITDA ​ $ 99,058 ​ $ 57,066 ​ $ 24,358 ​ (1) The calculation of Adjusted EBITDA as presented in this table begins with operating income as the most directly comparable GAAP measure.
Biggest changeAsset-Light Adjusted EBITDA should not be construed as a better measurement than operating income (loss), operating cash flow, net income, or earnings per share, as determined under GAAP. ​ Asset-Light Adjusted EBITDA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ ​ ​ 2023 2022 2021 ​ ​ ​ ($ thousands) ​ Operating Income (Loss) (1) ​ $ (12,271) ​ $ 52,725 ​ $ 46,397 ​ Depreciation and amortization (2) ​ ​ 20,370 ​ ​ 20,730 ​ ​ 11,387 ​ Change in fair value of contingent consideration (3) ​ ​ (19,100) ​ ​ 18,300 ​ ​ — ​ Lease impairment charges (4) ​ ​ 14,407 ​ ​ — ​ ​ — ​ Legal settlement (5) ​ ​ 9,500 ​ ​ — ​ ​ — ​ Gain on sale of subsidiary (6) ​ ​ — ​ ​ (402) ​ ​ (6,923) ​ Asset-Light Adjusted EBITDA ​ $ 12,906 ​ $ 91,353 ​ $ 50,861 ​ (1) The calculation of Asset-Light Adjusted EBITDA as presented in this table begins with operating income as the most directly comparable GAAP measure.
Management also believes Adjusted EBITDA to be relevant and useful information, as EBITDA is a standard measure commonly reported and widely used by analysts, investors, and others to measure financial performance of asset-light businesses and the ability to service debt obligations.
Management also believes Asset-Light Adjusted EBITDA to be relevant and useful information, as EBITDA is a standard measure commonly reported and widely used by analysts, investors, and others to measure financial performance of asset-light businesses and the ability to service debt obligations.
We also utilize certain software applications provided by third parties; provide underlying data to third parties; grant access to certain of our systems to third parties who provide certain outsourced administrative functions or other services; and increasingly store and transmit data with our customers and third parties by means of connected information technology systems, any of which may increase the risk of a data privacy breach or other cybersecurity incident.
We also utilize certain software applications provided by third parties; provide underlying data to third parties; grant access to certain of our systems to third parties who provide certain outsourced administrative functions or other services; and increasingly store and transmit data with our customers and third parties by means of connected information technology (“IT”) systems, any of which may increase the risk of a data privacy breach or other cybersecurity incident.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION S ​ ArcBest Corporation ™ (together with its subsidiaries, the “Company,” “ArcBest ® ,” “we,” “us,” and “our”) is a multibillion-dollar integrated logistics company that leverages technology and a full suite of shipping and logistics solutions to meet our customers’ supply chain needs.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION S ​ ArcBest Corporation ™ (together with its subsidiaries, the “Company,” “ArcBest ® ,” “we,” “us,” and “our”) is a multibillion-dollar integrated logistics company that leverages our technology and a full suite of solutions to meet our customers’ supply chain needs.
These statistics are defined within the key indicators below and referred to throughout the discussion of the results of our Asset-Based segment: ​ ● Overall customer demand for Asset-Based transportation services, including the impact of economic factors. ​ ● Volume of transportation services provided and processed through our network, which influences operating leverage as the level of tonnage and number of shipments vary, primarily measured by: ​ Pounds or Tonnage – total weight of shipments processed during the period in U.S. pounds or U.S. tons. ​ Pounds per day or Tonnage per day (average daily shipment weight) – pounds or tonnage divided by the number of workdays in the period. ​ Shipments per day – total number of shipments moving through the Asset-Based freight network during the period divided by the number of workdays in the period. ​ Pounds per shipment (weight per shipment) – total pounds divided by the number of shipments during the period. ​ Average length of haul (miles) – total miles between origin and destination service centers for all shipments (including shipments moved with purchased transportation) during the period, with miles based on the size of shipments. ​ ● Prices obtained for services, including fuel surcharges, primarily measured by: ​ Billed revenue per hundredweight, including fuel surcharges (yield) – revenue per 100 pounds of shipment weight, including fuel surcharges, systematically calculated as shipments are processed in the Asset-Based freight network.
These statistics are defined within the key indicators below and referred to throughout the discussion of the results of our Asset-Based segment: ​ ● Overall customer demand for Asset-Based transportation services, including the impact of economic factors. ​ ● Volume of transportation services provided and processed through our network which influences operating leverage as the level of tonnage and number of shipments vary, primarily measured by: ​ Pounds or Tonnage – total weight of shipments processed during the period in U.S. pounds or U.S. tons. ​ Tonnage per day (average daily shipment weight) – tonnage divided by the number of workdays in the period. ​ Shipments per day – total number of shipments moving through the Asset-Based freight network during the period divided by the number of workdays in the period. ​ Pounds per shipment (weight per shipment) – total pounds divided by the number of shipments during the period. ​ Average length of haul (miles) – total miles between origin and destination service centers for all shipments (including shipments moved with purchased transportation) during the period. ​ ● Prices obtained for services, including fuel surcharges, primarily measured by: ​ Billed revenue per hundredweight, including fuel surcharges (yield) – revenue per 100 pounds of shipment weight, including fuel surcharges, systematically calculated as shipments are processed in the Asset-Based freight network.
To better align fuel surcharges to fuel- and energy-related expenses and provide more stability to account profitability as fuel prices change, we may, from time to time, revise our standard fuel surcharge program, which impacts approximately one-third of Asset-Based shipments and primarily affects noncontractual customers.
Department of Energy. To better align fuel surcharges to fuel- and energy-related expenses and provide more stability to account profitability as fuel prices change, we may, from time to time, revise our standard fuel surcharge program, which impacts approximately one-third of Asset-Based shipments and primarily affects noncontractual customers.
A significant disruption in our information technology systems or a significant cybersecurity incident, including denial of service, system failure, security breach, intentional or inadvertent acts by employees or vendors with access to our systems or data, disruption by malware, or other damage, could interrupt or delay our operations, damage our reputation, cause a loss of customers, cause errors or delays in financial reporting, result in violation of privacy laws, expose us to a risk of loss or litigation, and/or cause us to incur significant time and expense to remedy such an event. ​ We have experienced incidents involving attempted denial of service attacks, malware attacks, and other events intended to disrupt information systems, wrongfully obtain valuable information, or cause other types of malicious events that could have resulted in harm to our business.
A significant disruption in our IT systems or a significant cybersecurity incident, including denial of service, system failure, security breach, intentional or inadvertent acts by employees or vendors with access to our systems or data, disruption by malware, or other damage, could interrupt or delay our operations, damage our reputation, cause a loss of customers, cause errors or delays in financial reporting, result in violation of privacy laws, expose us to a risk of loss or litigation, and/or cause us to incur significant time and expense to remedy such an event. ​ We have experienced incidents involving attempted denial of service attacks, malware attacks, and other events intended to disrupt information systems, wrongfully obtain valuable information, or cause other types of malicious events that could have resulted in harm to our business.
These key indicators are used by management to evaluate segment operating performance and measure the effectiveness of strategic initiatives in the results of our Asset-Light segments. We quantify certain key indicators using key operating statistics which are important measures in analyzing segment operating results from period to period.
These key indicators are used by management to evaluate segment operating performance and measure the effectiveness of strategic initiatives in the results of our Asset-Light segment. We quantify certain key indicators using key operating statistics which are important measures in analyzing segment operating results from period to period.
Generally, freight is rated by a class system, which is established by the National Motor Freight Traffic Association, Inc. Light, bulky freight typically has a higher class and is priced at a higher revenue per hundredweight than dense, heavy freight.
Generally, LTL freight is rated by a class system, which is established by the National Motor Freight Traffic Association, Inc. Light, bulky freight typically has a higher class and is priced at a higher revenue per hundredweight than dense, heavy freight.
Changes in the rated class and packaging of the freight, along with changes in other freight profile factors, such as average shipment size; average length of haul; freight density; and customer and geographic mix, can affect the average billed revenue per hundredweight measure. ​ Approximately 20% to 25% of our Asset-Based business is subject to base LTL tariffs, which are affected by general rate increases, combined with individually negotiated discounts.
Changes in the rated class and packaging of the freight, along with changes in other freight profile factors, such as average shipment size; average length of haul; freight density; and customer and geographic mix, can affect the average billed revenue per hundredweight measure. ​ Approximately 20% of our Asset-Based business is subject to base LTL tariffs, which are affected by general rate increases, subject to individually-negotiated discounts.
However, management believes that certain non-GAAP performance measures and ratios, such as Adjusted EBITDA, which is utilized for internal analysis, provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends.
However, management believes that certain non-GAAP performance measures and ratios, such as Asset-Light Adjusted EBITDA, which is utilized for internal analysis, provide analysts, investors, and others the same information that we use internally for purposes of assessing our core operating performance and provides meaningful comparisons between current and prior period results, as well as important information regarding performance trends.
MD&A is comprised of the following: ​ ● Results of Operations includes: ● an overview of consolidated results with 2022 compared to 2021, and a consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”) reconciliation to net income; ● a financial summary and analysis of our Asset-Based segment results of 2022 compared to 2021, including a discussion of key actions and events that impacted the results; ● a financial summary and analysis of the results of our Asset-Light operations for 2022 compared to 2021, including a discussion of key actions and events that impacted the results; and ● a discussion of other matters impacting operating results, including effects of inflation, current economic conditions, environmental and legal matters, and information technology and cybersecurity. ● Liquidity and Capital Resources provides an analysis of key elements of the cash flow statements, borrowing capacity, and contractual cash obligations, including a discussion of financing arrangements and financial commitments. ● Income Taxes provides an analysis of the effective tax rates and deferred tax balances, including deferred tax asset valuation allowances. ● Critical Accounting Policies and Estimates discusses those accounting policies that are important to understanding certain material judgments and assumptions incorporated in the reported financial results. ● Recent Accounting Pronouncements discusses accounting standards that are not yet effective for our financial statements but are expected to have a material effect on our future results of operations or financial condition. ​ ​ RESULTS OF OPERATIONS ​ This Results of Operations section of MD&A generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
MD&A is comprised of the following: ​ ● Results of Operations includes: ● an overview of consolidated results with 2023 compared to 2022, and a consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”) reconciliation to net income; ● a financial summary and analysis of our Asset-Based segment results of 2023 compared to 2022, including a discussion of key actions and events that impacted the results; ● a financial summary and analysis of the results of our Asset-Light segment for 2023 compared to 2022, including a discussion of key actions and events that impacted the results; and ● a discussion of other matters impacting operating results, including effects of inflation, current economic conditions, environmental and legal matters, and information technology and cybersecurity. ● Liquidity and Capital Resources provides an analysis of key elements of the cash flow statements, borrowing capacity, and contractual cash obligations, including a discussion of financing arrangements and financial commitments. ● Income Taxes provides an analysis of the effective tax rates and deferred tax balances, including deferred tax asset valuation allowances. ● Critical Accounting Policies and Estimates discusses those accounting policies that are important to understanding certain material judgments and assumptions incorporated in the reported financial results. ● Recent Accounting Pronouncements discusses accounting standards that are not yet effective for our financial statements but are expected to have a material effect on our future results of operations or financial condition. ​ 39 Table of Contents RESULTS OF OPERATIONS ​ This Results of Operations section of MD&A generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The liability for contingent consideration is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income. See Note D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The liability for contingent consideration is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income. See Note C to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Goodwill is recorded as the excess of an acquired entity’s purchase price over the value of the amounts assigned to identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is evaluated for impairment annually or more frequently if indicators of impairment exist. The annual impairment testing on the goodwill balances was performed as of October 1, 2022.
Goodwill is recorded as the excess of an acquired entity’s purchase price over the value of the amounts assigned to identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is evaluated for impairment annually or more frequently if indicators of impairment exist. The annual impairment testing on the goodwill balances was performed as of October 1, 2023.
Billed revenue used for calculating revenue per hundredweight measurements is not adjusted for the portion of revenue deferred for financial statement purposes. ​ ● Ability to manage cost structure, primarily in the area of salaries, wages, and benefits (“labor”), with the total cost structure primarily measured by: ​ Operating ratio – the percent of operating expenses to revenue levels. ​ We also quantify certain key operating statistics which are used by management to evaluate productivity of operations within the Asset-Based freight network and to measure the effectiveness of strategic initiatives to manage the segment’s cost structure from period to period.
Billed revenue used for calculating revenue per hundredweight measurements is not adjusted for the portion of revenue deferred for financial statement purposes. ​ ● Ability to manage cost structure, primarily in the area of salaries, wages, and benefits (“labor”), with the total cost structure primarily measured by: ​ Operating ratio – the percent of operating expenses to revenue levels. ​ We also quantify certain key operating statistics, which are used by management to evaluate productivity of operations within the Asset-Based freight network and to measure the effectiveness of strategic initiatives to 43 Table of Contents manage the segment’s cost structure from period to period.
The segment’s operating results will continue to be impacted by further changes in fuel prices and the related fuel surcharges. ​ Labor Costs Our Asset-Based labor costs, including retirement and healthcare benefits for contractual employees that are provided by a number of multiemployer plans (see Note J to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K), are impacted by contractual obligations under the 2018 ABF NMFA and other related supplemental agreements.
The segment’s operating results will continue to be impacted by further changes in fuel prices and the related fuel surcharges. ​ Labor Costs Our Asset-Based labor costs, including retirement and healthcare benefits for contractual employees that are provided by a number of multiemployer plans (see Note K to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K), are impacted by contractual obligations under the 2023 ABF NMFA and other related supplemental agreements.
The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Adjusted EBITDA as a key measure of performance and for business planning.
The use of certain non-GAAP measures improves comparability in analyzing our performance because it removes the impact of items from operating results that, in management’s opinion, do not reflect our core operating performance. Management uses Asset-Light Adjusted EBITDA as a key measure of performance and for business planning.
As previously outlined, the 2018 ABF NMFA provided for ABF Freight’s contributions to multiemployer pension plans to remain at the rates that were paid under the prior labor agreement with the IBT, while wage rates and health and welfare contribution rates for most plans increased annually in accordance with the terms of the 2018 ABF NMFA.
As previously outlined, the 2023 ABF NMFA provided for ABF Freight’s contributions to multiemployer pension plans to remain at the rates that were paid under the prior labor agreement with the IBT, while wage rates and health and welfare contribution rates for most plans increased annually in accordance with the terms of the 2023 ABF NMFA.
A-100-basis point decrease in the discount rate would increase the liability by $3.0 million. ​ The liability for contingent earnout consideration is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income.
A 100-basis point decrease in the discount rate would increase the liability by $3.6 million. ​ The liability for contingent earnout consideration is remeasured at each quarterly reporting date, and any change in fair value as a result of the recurring assessments is recognized in operating income.
Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our Fourth Amended and Restated Credit Agreement (see Note H to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).
Additionally, Adjusted EBITDA is a primary component of the financial covenants contained in our Fourth Amended and Restated Credit Agreement (see Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).
However, various factors, including the amount of pre-tax income as well as benefits recognized in the income statement upon settlement of share-based payment awards, caused our full year 2022 effective tax rate to vary significantly from the statutory rate.
However, various factors, including the amount of pre-tax income as well as benefits recognized in the income statement upon settlement of share-based payment awards, caused our full year 2023 effective tax rate to vary significantly from the statutory rate.
Other companies may calculate Adjusted EBITDA differently; therefore, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results.
Other companies may calculate adjusted EBITDA differently; therefore, our calculation of Asset-Light Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results.
Changes in salaries, wages, and benefits expense and shared services expenses, which include labor 43 Table of Contents costs related to ABF Freight’s portion of company-wide functions, as a percentage of revenues are discussed in the following Asset-Based Segment Results section. ​ ABF Freight operates in a highly competitive industry comprised primarily of nonunion motor carriers.
Changes in salaries, wages, and benefits expense and shared services expenses, which include labor costs related to ABF Freight’s portion of company-wide functions, as a percentage of revenues are discussed in the following Asset-Based Segment Results section. ​ ABF Freight operates in a highly competitive industry comprised primarily of nonunion motor carriers.
Any significant failure or other disruption in our critical information systems, including denial 53 Table of Contents of service ransomware, and other cybersecurity attacks and incidents that impact the availability, reliability, speed, accuracy, or other proper functioning of these systems or that result in proprietary information or sensitive or confidential data, including personal information of customers, employees and others, being compromised could have a significant impact on our operations.
Any significant failure or other disruption in our critical information systems, including denial of service, ransomware, and other cybersecurity attacks and incidents that impact the availability, reliability, speed, accuracy, or other proper functioning of these systems or that result in proprietary information or sensitive or confidential data, including personal information of customers, employees and others, being compromised could have a significant impact on our operations.
In addition to our focus on sustainability of our equipment and facilities, we continue our commitment to advance environmental, social and governance initiatives that are critical to our business and our customers’ businesses by investing in innovative technologies, developing our employees, and enhancing our capabilities and services for customers. ​ We are involved in various legal actions, the majority of which arise in the ordinary course of business.
In addition to our focus on sustainability of our equipment and facilities, we continue our commitment to advance environmental and social issues that are critical to our business and our customers’ businesses by investing in innovative technologies, developing our employees, and enhancing our capabilities and services for customers. ​ We are involved in various legal actions, the majority of which arise in the ordinary course of business.
We also provide employee awareness training around phishing, malware, and other cyber risks. Despite our efforts, due to the increasing sophistication of cyber criminals and the development of new techniques for attack, we may be unable to anticipate or promptly detect, or implement adequate protective or remedial measures against, the activities of perpetrators of cyberattacks.
We also provide employee awareness training around phishing, malware, and other cyber risks. Despite our efforts, due to the increasing sophistication of cyber criminals and the development of new techniques for attack, we may be unable to anticipate or promptly detect, or implement adequate protective or remedial measures against, the activities of perpetrators of cybersecurity attacks.
We must continuously monitor and develop our information technology networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and other events that could have a security impact. We have made and continue to make significant financial investments in technologies and processes to mitigate these risks.
We must continuously monitor and develop our IT networks and infrastructure to prevent, detect, address, and mitigate the risk of unauthorized access, misuse, computer viruses, and other events that could have a security impact. We have made and continue to make significant financial investments in technologies and processes to mitigate these risks.
We have no investments, loans, or any other known contractual arrangements with unconsolidated special-purpose entities, variable interest entities, or financial partnerships and have no outstanding loans with our executive officers or directors. 56 Table of Contents ​ ABF Freight has a withdrawal liability that was triggered when its multiemployer pension plan obligation with the New England Teamsters Trucking Industry Pension Fund was restructured under a transition agreement in 2018.
We have no investments, loans, or any other known contractual arrangements with unconsolidated special-purpose entities, variable interest entities, or financial partnerships and have no outstanding loans with our executive officers or directors. ​ ABF Freight has a withdrawal liability that was triggered when its multiemployer pension plan obligation with the New England Teamsters Trucking Industry Pension Fund was restructured under a transition agreement in 2018.
Our acquisition of MoLo, including detail regarding the initial consideration payment and provision for certain additional cash consideration based on the achievement of certain targets, is discussed further in Note D to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ Our Asset-Light operations are affected by general economic conditions, as well as several other competitive factors that are more fully described in Part I, Item 1 (Business) and in Part I, Item 1A (Risk Factors) of this Annual Report on 47 Table of Contents Form 10-K.
Our acquisition of MoLo, including detail regarding the initial consideration payment and provision for certain additional cash consideration based on the achievement of certain targets, is discussed further in Note E to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ Our Asset-Light operations are affected by general economic conditions, as well as several other competitive factors that are more fully described in Part I, Item 1 (Business) and in Part I, Item 1A (Risk Factors) of this Annual Report on Form 10-K.
The scheduled maturities of our operating lease liabilities as of December 31, 2022 are disclosed in Note G to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ We sponsor an insured postretirement health benefit plan that provides supplemental medical benefits and dental and vision care to certain executive officers.
The scheduled maturities of our operating lease liabilities as of December 31, 2023 are disclosed in Note H to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ We sponsor an insured postretirement health benefit plan that provides supplemental medical benefits and dental and vision care to certain executive officers.
The fair value of the contingent earnout consideration liability for the MoLo acquisition was determined with the assistance of an independent third-party valuation firm who utilized a Monte Carlo simulation with Level 3 inputs including scenarios of estimated revenues and earnings before interest, taxes, depreciation and amortization to be achieved for the applicable performance periods, volatility factors applied to the simulations, and the discount rate applied, which was 14.0% and 9.0% as of December 31, 2022 and 2021, respectively.
The fair value of the contingent earnout consideration liability for the MoLo acquisition was determined with the assistance of an independent third-party valuation firm who utilized a Monte Carlo simulation with Level 3 inputs including scenarios of estimated revenues and earnings before interest, taxes, depreciation and amortization (“EBITDA”) to be achieved for the applicable performance periods, volatility factors applied to the simulations, and the discount rate applied, which was 13.3% and 14.0% as of December 31, 2023 and 2022, respectively.
We estimate these amounts based on the expected discounts earned by customers, and revenue is recognized using these estimates. Revenue adjustments may also occur due to rating or other billing adjustments. We estimate revenue adjustments based on historical information, and revenue is recognized accordingly at the time of shipment.
We estimate these amounts based on the expected discounts earned by customers, and revenue is recognized using these estimates. Revenue adjustments may also occur due to rating or other billing adjustments. We estimate revenue 63 Table of Contents adjustments based on historical information, and revenue is recognized accordingly at the time of shipment.
Throughout 2022, the fuel surcharge mechanism generally continued to have market acceptance among customers; however, certain nonstandard pricing arrangements have limited the amount of fuel surcharge recovered.
Throughout 2023, the fuel surcharge mechanism generally continued to have market acceptance among customers; however, certain nonstandard pricing arrangements have limited the amount of fuel surcharge recovered.
Management is not aware of any current cybersecurity incident that has had a material effect on our operations, although there can be no assurances that a cyber incident that could have a material impact to our operations could not occur. ​ 54 Table of Contents LIQUIDITY AND CAPITAL RESOURCES ​ Our primary sources of liquidity are cash, cash equivalents, and short-term investments, cash generated by operations, and borrowing capacity under our revolving credit facility or our accounts receivable securitization program. ​ This Liquidity and Capital Resources section of MD&A generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Management is not aware of any current cybersecurity incident that has had a material effect on our operations, although there can be no assurances that a cyber incident that could have a material impact to our operations could not occur. ​ ​ LIQUIDITY AND CAPITAL RESOURCES ​ Our primary sources of liquidity are cash, cash equivalents, and short-term investments; cash generated by continuing operations; and borrowing capacity under our revolving credit facility or our accounts receivable securitization program. ​ This Liquidity and Capital Resources section of MD&A generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
As of December 31, 2022, estimated projected payments, net of retiree premiums, related to postretirement health benefits total $0.7 million for the next year and $7.3 million for the next 10 years. These projected amounts are subject to change based upon increases and other changes in premiums and medical costs and continuation of the plan for current participants.
As of December 31, 2023, estimated projected payments, net of retiree premiums, related to postretirement health benefits total $0.7 million for the next year and $7.5 million for the next 10 years. These projected amounts are subject to change based upon increases and other changes in premiums and medical costs and continuation of the plan for current participants.
Due to taxable income, there is no need for a valuation allowance on federal net operating loss carryforwards at December 31, 2022.
Due to taxable income, there is no need for a valuation allowance on federal net operating loss carryforwards at December 31, 2023.
Although we strive to carefully select our third-party vendors, we do not control their actions and any problems caused by or impacting these third parties, including cyberattacks and security breaches at a vendor, could result in claims, litigation, losses, and/or liabilities and materially adversely affect our ability to provide service to our customers and otherwise conduct our business. ​ Our information technology systems are protected through physical and software safeguards as well as backup systems considered appropriate by management.
Although we strive to carefully select our third-party vendors, we do not control their actions and any problems caused by or impacting these third parties, including cybersecurity attacks and security breaches at a vendor, could result in claims, litigation, losses, and/or liabilities and materially adversely affect our ability to provide service to our customers and otherwise conduct our business. ​ Our IT systems are protected through physical and software safeguards as well as backup systems considered appropriate by management.
Economic factors and the industry environment were considered in assessing recoverability of long-lived assets, including revenue equipment (primarily tractors and trailers used in our Asset-Based operations and trailers used in our expedite and 60 Table of Contents dedicated operations).
Economic factors and the industry environment were considered in assessing recoverability of long-lived assets, including revenue equipment (primarily tractors and trailers used in our Asset-Based operations and trailers used in our expedite and dedicated operations).
The CMC is an additional pricing mechanism to better capture the value we provide in transporting these shipments. ​ Fuel The transportation industry is dependent upon the availability of adequate fuel supplies. The Asset-Based segment assesses a fuel surcharge based on the index of national on-highway average diesel fuel prices published weekly by the U.S. Department of Energy.
CMC is an additional pricing mechanism to better capture the value we provide in transporting these shipments. ​ 45 Table of Contents Fuel The transportation industry is dependent upon the availability of adequate fuel supplies. The Asset-Based segment assesses a fuel surcharge based on the index of national on-highway average diesel fuel prices published weekly by the U.S.
A portion of our variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility.
A portion of our variable life insurance policies 41 Table of Contents have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in the Income Taxes section of MD&A in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. ​ Our effective tax rate was 24.1% and 23.0% of pre-tax income for 2022 and 2021, respectively.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in the Income Taxes section of MD&A in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. ​ Our effective tax rate on continuing operations was 23.9% and 24.1% of pre-tax income for 2023 and 2022, respectively.
These state net operating loss carryforwards were reserved by valuation allowances of $0.4 million, and there were additional valuation allowances of $0.2 million related to state research and development tax credits and less than $0.1 million related to state interest expense carryforwards at December 31, 2022.
These state net operating loss carryforwards were reserved by valuation allowances of $0.5 million, and there were additional valuation allowances of $0.2 million related to state research and development tax credits and less than $0.1 million related to state interest expense carryforwards at December 31, 2023.
The evaluation includes an analysis of qualitative factors to determine if it is more likely than not the fair value of the reporting unit is less than its carrying value.
Our annual evaluation typically includes an analysis of qualitative factors to determine if it is more likely than not the fair value of the reporting unit is less than its carrying value.
The January 2023 PMI marks the third consecutive month of economic contraction in the manufacturing sector following the 29-month period of growth in factory activity since the COVID-19 pandemic-related contractions in April and May 2020. The Industrial Production Index issued by the Federal Reserve decreased at an annual rate of 1.7% for fourth quarter 2022.
The January 2024 PMI marks the fifteenth consecutive month of economic contraction in the manufacturing sector following the 29-month period of growth in factory activity since the COVID-19 pandemic-related contractions in April and May 2020. The Industrial Production Index issued by the Federal Reserve decreased at an annual rate of 3.1% for fourth quarter 2023.
As such, there can be no assurances of the potential impact of inflationary conditions on our business. ​ Generally, inflationary increases in labor and fuel costs as they relate to our Asset-Based operations have historically been mostly offset through price increases and fuel surcharges.
As such, there can be no assurances of the potential impact of inflationary conditions on our business, including demand for our transportation services. ​ Generally, inflationary increases in labor and fuel costs as they relate to our Asset-Based operations have historically been mostly offset through price increases and fuel surcharges.
See Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of the Asset-Based segment and additional segment information, including revenues, operating expenses, and operating income for the years ended December 31, 2022, 2021, and 2020. ​ 40 Table of Contents The key indicators necessary to understand the operating results of our Asset-Based segment are outlined below.
See Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of the Asset-Based segment and additional segment information, including revenues, operating expenses, and operating income for the years ended December 31, 2023, 2022, and 2021. ​ The key indicators necessary to understand the operating results of our Asset-Based segment are outlined below.
See Note N to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for descriptions of the ArcBest and FleetNet segments and additional segment information, including revenues, operating expenses, and operating income for the years ended December 31, 2022, 2021, and 2020. ​ The key indicators necessary to understand our Asset-Light operating results are outlined below.
See Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for descriptions of the Asset-Light segment and additional segment information, including revenues, operating expenses, and operating income for the years ended December 31, 2023, 2022, and 2021. ​ The key indicators necessary to understand our Asset-Light segment operating results are outlined below.
(2) The year ended December 31, 2021, represents a gain of $6.9 million related to the sale of the labor services portion of the ArcBest segment’s moving business in second quarter 2021.
(6) The year ended December 31, 2021, represents a gain of $6.9 million related to the sale of the labor services portion of the Asset-Light segment’s moving business in second quarter 2021.
During the next 12 months and for the foreseeable future, we believe existing cash, cash equivalents, short-term investments, cash generated by operating activities, and amounts available under our Credit Facility and our accounts receivable securitization program will be sufficient to finance our operating expenses; fund our ongoing initiatives to grow our business, including investments in technology; repay amounts due under our financing arrangements; and pay contingent earnout consideration related to the 57 Table of Contents MoLo acquisition as it is earned.
During the next 12 months and for the foreseeable future, we believe existing cash, cash equivalents, short-term investments, cash generated by operating activities, and amounts available under our revolving credit facility will be sufficient to finance our operating expenses; fund our ongoing initiatives to grow our business, including investments in technology; repay amounts due under our financing arrangements; and pay contingent earnout consideration related to the MoLo acquisition as it is earned.
See Note O to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of the environmental matters to which we are subject. ​ Concern over climate change has led to legislative and regulatory efforts to limit carbon and other greenhouse gas (“GHG”) emissions, and we may incur significant costs to comply with increased regulation related to climate change in the future.
See Note P to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of the environmental matters to which we are subject, including additional detail on ABF Freight’s Consent Decree with the EPA. ​ Concern over climate change has led to legislative and regulatory efforts to limit carbon and other greenhouse gas (“GHG”) emissions, and we may incur significant costs to comply with increased regulation related to climate change in the future.
Notes payable, finance leases, and other secured financing may also be used to fund capital expenditures, provided that such arrangements are available, and the terms are acceptable to us. ​ The Agreement and Plan of Merger (the “Merger Agreement”) for our acquisition of MoLo is subject to certain post-closing adjustments which were estimated at closing and provides for additional cash consideration ranging from 44% to 212% of the target payment relative to the achievement of incremental adjusted EBITDA targets of 80% to 300% for years 2023 through 2025.
Notes payable, finance leases, and other secured financing may also be used to fund capital expenditures, provided that such arrangements are available, and the terms are acceptable to us. ​ The Agreement and Plan of Merger (the “Merger Agreement”) for our acquisition of MoLo provides for additional cash consideration ranging from 44% to 212% of the target payment relative to the achievement of incremental adjusted EBITDA targets of 80% to 300% for years 2023 through 2025.
For certain services, we require payment before the services are delivered to the customer. ​ We expense sales commissions when incurred because the amortization period is one year or less. ​ Impairment Assessment of Long-Lived Assets We review our long-lived assets, including property, plant and equipment and capitalized software, which are held and used in our operations, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
For certain services, we require payment before the services are delivered to the customer. ​ We expense sales commissions when incurred because the amortization period is one year or less. ​ Impairment Assessment of Long-Lived Assets We review our long-lived assets, including property, plant and equipment and operating right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
The accumulated benefit obligation of the postretirement health benefit plan accrued in the consolidated balance sheet totaled $12.5 million as of December 31, 2022. ​ We have purchase obligations, consisting of authorizations to purchase and binding agreements with vendors, relating to revenue equipment used in our Asset-Based and Asset-Light operations, other equipment, facility improvements, software, service contracts, and other items for which amounts were not accrued in the consolidated balance sheet as of December 31, 2022.
The accumulated benefit obligation of the postretirement health benefit plan accrued in the consolidated balance sheet totaled $13.7 million as of December 31, 2023. ​ 59 Table of Contents We have purchase obligations, consisting of authorizations to purchase and binding agreements with vendors, relating to revenue equipment used in our Asset-Based and Asset-Light operations, other equipment, facility improvements, software, service contracts, and other items for which amounts were not accrued in the consolidated balance sheet as of December 31, 2023.
(4) Gain relates to the sale of the labor services portion of the ArcBest segment's moving business in second quarter 2021, including the contingent amount recognized in second quarter 2022 when the funds were released from escrow.
(6) Gain relates to the sale of the labor services portion of the Asset-Light segment’s moving business in second quarter 2021, including the contingent amount recognized in second quarter 2022 when the funds were released from escrow.
These 2023 estimated net capital expenditures include revenue equipment purchases of $175.0 million, primarily for our Asset-Based operations, including approximately $60.0 million of previously planned 2022 equipment purchases which were delayed due to supply chain-related manufacturing delays and cancellations and carried over to our 2023 planned expenditures.
These 2024 estimated net capital expenditures include revenue equipment purchases of $155.0 million, primarily for our Asset-Based operations, including approximately $10.2 million of previously planned 2023 equipment purchases which were delayed due to supply chain-related manufacturing delays and cancellations and carried over to our 2024 planned expenditures.
Key performance indicators or operating statistics should 41 Table of Contents be viewed in addition to, and not as an alternative for, our reported results.
Key performance indicators or operating statistics should be viewed in addition to, and not as an alternative for, our reported results.
There can be no assurance that we will be able to secure adequate prices from our customers to maintain or improve our operating results.
There can be no assurance that we will be able to secure adequate prices from this new business or from our existing customers to maintain or improve our operating results.
The need for additional valuation allowances is continually monitored by management. ​ At December 31, 2022 and 2021, there was a reserve for uncertain tax positions of $0.9 million related to credits taken on federal returns. ​ Financial reporting income differs significantly from taxable income because of items such as bonus or accelerated depreciation for tax purposes, and a significant number of liabilities such as vacation pay, workers’ compensation reserves, and other liabilities, which, for tax purposes, are generally deductible only when paid.
The need for additional valuation allowances is continually monitored by management. ​ At December 31, 2023 and 2022, there was a reserve for uncertain tax positions of $0.9 million related to credits taken on federal returns, of which $0.5 million will reverse in the second quarter of 2024 upon the expiration of the statute of limitations. ​ Financial reporting income differs significantly from taxable income because of items such as bonus or accelerated depreciation for tax purposes, and a significant number of liabilities such as vacation pay, workers’ compensation reserves, and other liabilities, which, for tax purposes, are generally deductible only when paid.
For the year ended December 31, 2022, financial reporting income exceeded taxable income, and for the year ended December 31, 2021, taxable income exceeded financial reporting income. ​ We made $148.7 million of federal, state, and foreign tax payments during the year ended December 31, 2022, and received refunds of $42.3 million of federal, state, and foreign taxes that were paid in prior years. ​ Management expects the cash outlays for income taxes will be less than reported income tax expense in 2023 due primarily to the effect of 80% bonus depreciation on qualified depreciable assets in 2023 as allowed under the Tax Reform Act of 59 Table of Contents 1986 (the “Tax Reform Act”), as amended.
For the years ended December 31, 2023 and 2022 financial reporting income exceeded taxable income. ​ We made $115.7 million of federal, state, and foreign tax payments during the year ended December 31, 2023, and received refunds of $36.4 million of federal, state, and foreign taxes that were paid in prior years. ​ Management expects the cash outlays for income taxes will be less than reported income tax expense in 2024 due primarily to the effect of 60% bonus depreciation on qualified depreciable assets in 2024 as allowed under the Tax Reform Act of 1986 (the “Tax Reform Act”), as amended.
Significant declines in our business levels or other changes in cash flow assumptions or other factors that negatively impact the fair value of the operations of our reporting units could result in impairment and a resulting noncash write-off of a significant portion of the goodwill and intangible assets of our ArcBest segment, which would have an adverse effect on our financial condition and operating results. ​ Effects of Inflation ​ As previously discussed, inflation remains at record high levels.
Significant declines in our business levels or other changes in cash flow assumptions or other factors that negatively impact the fair value of the operations of our reporting units could result in impairment and a resulting noncash write-off of a significant portion of the goodwill and intangible assets of our Asset-Light segment, which would have an adverse effect on our financial condition and operating results. ​ Effects of Inflation ​ Inflation remains above normal levels.
For the ArcBest segment, amortization of acquired intangibles totaled $12.9 million, $5.3 million, and $3.7 million for 2022, 2021, and 2020, respectively, and is expected to total approximately $13.0 million for 2023. (3) Represents the increase in fair value of the contingent earnout consideration recorded for the MoLo acquisition.
Amortization of acquired intangibles totaled $12.8 million, $12.9 million, and $5.3 million for 2023, 2022, and 2021, respectively, and is expected to total approximately $13.0 million for 2024. (3) Represents the change in fair value of the contingent earnout consideration recorded for the MoLo acquisition.
The measure is particularly meaningful for analysis of our operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light businesses, changes in the fair value of contingent earnout consideration, gain on sale of subsidiary, and transaction costs, which are significant expenses or gains resulting from strategic decisions rather than core daily operations.
The measure is particularly meaningful for analysis of our operating performance, because it excludes amortization of acquired intangibles and software of the Asset-Light segment, changes in the fair value of contingent earnout consideration and equity investment, lease impairment charges, estimated legal settlement expenses of the Asset-Light segment, gain on sale of subsidiary, and transaction costs, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations.
As of December 31, 2022, payments due within one year under the withdrawal liability settlement total $1.6 million and total payments, which are due over the next 19 years, total $29.8 million. As of December 31, 2022, the outstanding withdrawal liability recognized in the consolidated balance sheet for this obligation totaled $20.1 million.
As of December 31, 2023, payments due within one year under the withdrawal liability settlement total $1.6 million and total payments, which are due over the next 18 years, total $28.2 million. As of December 31, 2023, the outstanding withdrawal liability recognized in the consolidated balance sheet for this obligation totaled $19.4 million.
Depreciation and amortization expense, excluding amortization of intangibles, is estimated to be approximately $130.0 million in 2023.
Depreciation and amortization expense, excluding amortization of intangibles, is estimated to be approximately $142.0 million in 2024.
A 10% increase in the estimate of IBNR would increase the total 2022 expense for workers’ compensation and third-party casualty claims by approximately $5.7 million.
A 10% increase in the estimate of IBNR would increase the total 2023 expense for workers’ compensation and third-party casualty claims by approximately $6.8 million.
(4) Represents costs associated with the acquisition of MoLo. ​ ​ Asset-Based Operations ​ Asset-Based Segment Overview ​ The Asset-Based segment consists of ABF Freight System, Inc., a wholly owned subsidiary of ArcBest Corporation, and certain other subsidiaries. Our Asset-Based segment operates one of North America’s largest less-than-truckload (“LTL”) networks providing freight transportation services.
(7) Represents costs associated with the acquisition of MoLo. ​ 42 Table of Contents ​ Asset-Based Operations ​ Asset-Based Segment Overview ​ The Asset-Based segment consists of ABF Freight System, Inc., a wholly owned subsidiary of ArcBest Corporation, and certain other subsidiaries. Our Asset-Based segment provides freight transportation services through one of North America’s largest less-than-truckload (“LTL”) carriers.
Further, ABF Freight could also trigger complete or partial withdrawal liability from certain multiemployer pension plans through, among other things, mergers and other fundamental corporate transactions and as a result of operational changes, site closures and job losses, which could result in material liabilities. ​ 44 Table of Contents Asset-Based Segment Results ​ The following table sets forth a summary of operating expenses and operating income as a percentage of revenue for the Asset-Based segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ ​ ​ 2022 2021 2020 ​ Asset-Based Operating Expenses (Operating Ratio) ​ ​ ​ ​ ​ ​ ​ Salaries, wages, and benefits ​ 43.0 % 46.6 % 52.4 % Fuel, supplies, and expenses ​ 12.6 ​ 10.3 ​ 10.0 ​ Operating taxes and licenses ​ 1.7 ​ 1.9 ​ 2.4 ​ Insurance ​ 1.6 ​ 1.5 ​ 1.6 ​ Communications and utilities ​ 0.6 ​ 0.7 ​ 0.8 ​ Depreciation and amortization ​ 3.2 ​ 3.6 ​ 4.5 ​ Rents and purchased transportation ​ 14.6 ​ 14.2 ​ 12.0 ​ Shared services ​ 9.4 ​ 10.2 ​ 10.4 ​ Gain on sale of property and equipment ​ (0.4) ​ (0.3) ​ (0.2) ​ Innovative technology costs (1) ​ 0.9 ​ 1.1 ​ 1.1 ​ Other ​ 0.1 ​ 0.1 ​ 0.3 ​ ​ ​ 87.3 % 89.9 % 95.3 % ​ ​ ​ ​ ​ ​ ​ ​ Asset-Based Operating Income ​ 12.7 % 10.1 % 4.7 % (1) Represents costs associated with the freight handling pilot test program at ABF Freight. ​ The following table provides a comparison of key operating statistics for the Asset-Based segment, as previously defined in the Asset-Based Segment Overview: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ ​ ​ 2022 2021 % Change Workdays (1) ​ ​ 252.0 ​ 252.0 ​ ​ ​ Billed revenue per hundredweight, including fuel surcharges ​ $ 45.45 ​ $ 39.70 14.5 % Pounds ​ 6,608,704,806 ​ 6,507,706,432 1.6 % Pounds per day ​ 26,225,019 ​ 25,824,232 1.6 % Shipments per day ​ 19,895 ​ 19,610 1.5 % Shipments per DSY hour ​ 0.428 ​ 0.447 (4.3) % Pounds per shipment ​ 1,318 ​ 1,317 0.1 % Pounds per mile ​ 18.71 ​ 18.79 (0.4) % Average length of haul (miles) ​ ​ 1,090 ​ ​ 1,097 ​ (0.6) % (1) Workdays represent the number of operating days during the period after adjusting for holidays and weekends. ​ Asset-Based Revenues Asset-Based segment revenues totaled $3.0 billion and $2.6 billion for the year ended December 31, 2022 and 2021, respectively.
Further, ABF Freight could also trigger complete or partial withdrawal liability from certain multiemployer pension plans through, among other things, mergers and other fundamental corporate transactions and as a result of operational changes, site closures and job losses, which could result in material liabilities. ​ Asset-Based Segment Results ​ The following table sets forth a summary of operating expenses and operating income as a percentage of revenue for the Asset-Based segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ ​ ​ 2023 2022 2021 ​ Asset-Based Operating Expenses (Operating Ratio) ​ ​ ​ ​ ​ ​ ​ Salaries, wages, and benefits ​ 48.1 % 43.0 % 46.6 % Fuel, supplies, and expenses ​ 12.6 ​ 12.6 ​ 10.3 ​ Operating taxes and licenses ​ 1.9 ​ 1.7 ​ 1.9 ​ Insurance ​ 1.8 ​ 1.6 ​ 1.5 ​ Communications and utilities ​ 0.7 ​ 0.6 ​ 0.7 ​ Depreciation and amortization ​ 3.6 ​ 3.2 ​ 3.6 ​ Rents and purchased transportation ​ 11.8 ​ 14.6 ​ 14.2 ​ Shared services ​ 9.7 ​ 9.4 ​ 10.2 ​ (Gain) loss on sale of property and equipment and lease impairment charges ​ — ​ (0.4) ​ (0.3) ​ Innovative technology costs (1) ​ 0.8 ​ 0.9 ​ 1.1 ​ Other ​ 0.2 ​ 0.1 ​ 0.1 ​ ​ ​ 91.2 % 87.3 % 89.9 % ​ ​ ​ ​ ​ ​ ​ ​ Asset-Based Operating Income ​ 8.8 % 12.7 % 10.1 % (1) Represents costs associated with the freight handling pilot test program at ABF Freight, as further discussed in the Asset-Based Operating Income section. ​ The following table provides a comparison of key operating statistics for the Asset-Based segment, as previously defined in the Asset-Based Segment Overview: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ ​ ​ 2023 2022 % Change Workdays (1) ​ ​ 251.5 ​ 252.0 ​ ​ ​ Billed revenue per hundredweight, including fuel surcharges ​ $ 44.46 ​ $ 45.45 (2.2) % Tonnage (tons) ​ 3,220,013 ​ 3,304,352 (2.6) % Tonnage per day ​ 12,803 ​ 13,113 (2.4) % Shipments per day ​ 20,529 ​ 19,895 3.2 % Shipments per DSY hour ​ 0.425 ​ 0.428 (0.7) % Pounds per shipment ​ 1,247 ​ 1,318 (5.4) % Pounds per mile ​ 18.87 ​ 18.71 0.9 % Average length of haul (miles) ​ ​ 1,092 ​ ​ 1,090 ​ 0.2 % (1) Workdays represent the number of operating days during the period after adjusting for holidays and weekends. ​ 47 Table of Contents Asset-Based Revenues Asset-Based segment revenues totaled $2.9 billion and $3.0 billion for the year ended December 31, 2023 and 2022, respectively.
Our key performance indicators or operating statistics should not be construed as better measurements of our results than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP. ​ As of December 2022, approximately 82% of our Asset-Based segment’s employees were covered under the ABF National Master Freight Agreement (the “2018 ABF NMFA”), the collective bargaining agreement with the International Brotherhood of Teamsters (the “IBT”), which will remain in effect through June 30, 2023.
Our key performance indicators or operating statistics should not be construed as better measurements of our results than operating income, operating cash flow, net income, or earnings per share, as determined under GAAP. ​ As of December 2023, approximately 82% of our Asset-Based segment’s employees were covered under the ABF National Master Freight Agreement (the “2023 ABF NMFA”), the collective bargaining agreement with the International Brotherhood of Teamsters (the “IBT”), which was ratified on June 30, 2023 by a majority of ABF Freight’s IBT member employees, replacing the prior collective bargaining agreement ratified in 2018 (the “2018 ABF NMFA”).
Higher fuel surcharge revenues associated with increased fuel prices also positively impacted the total billed revenue per hundredweight measure in 2022, compared to 2021. The Asset-Based segment’s average nominal fuel surcharge rate for 2022 increased approximately 16 percentage points from 2021 levels.
Lower fuel surcharge revenues associated with decreased fuel prices also negatively impacted the total billed revenue per hundredweight measure in 2023, compared to 2022. The Asset-Based segment’s average nominal fuel surcharge rate for 2023 decreased approximately 7 percentage points from 2022 levels.
As of December 31, 2022, contractual obligations for operating lease liabilities, primarily related to our Asset-Based service centers, totaled $232.8 million, including imputed interest, for an increase of $24.7 million from December 31, 2021. Operating lease payments due within one year total $31.9 million.
As of December 31, 2023, contractual obligations for operating lease liabilities, primarily related to our Asset-Based service centers, totaled $275.8 million, including imputed interest, for an increase of $43.0 million from December 31, 2022. Operating lease payments due within one year total $40.2 million.
As such, the key operating statistics management uses to evaluate performance of the ArcBest segment exclude managed transportation services transactions. ​ Other companies within our industry may present different key performance indicators or they may calculate their key performance indicators differently; therefore, our key performance indicators may not be comparable to similarly titled measures of other companies.
As such, the key operating statistics management uses to evaluate performance of the Asset-Light segment now include managed transportation services transactions for all periods presented and discussed below. ​ Other companies within our industry may present different key performance indicators or they may calculate their key performance indicators differently; therefore, our key performance indicators may not be comparable to similarly titled measures of other companies.
This measure is particularly meaningful for analysis of our Asset-Light businesses, because it excludes amortization of acquired intangibles and software, changes in the fair value of contingent earnout consideration, and gain on the sale of a subsidiary, which are significant expenses or gains resulting from strategic decisions rather than core daily operations.
This measure is particularly meaningful for analysis of our Asset-Light segment, because it excludes amortization of acquired intangibles and software, changes in the fair value of contingent earnout consideration, lease impairment charges, and estimated legal settlement expenses, which are significant expenses or gains resulting from strategic decisions or other factors rather than core daily operations.
The timing and extent of base price increases on our Asset-Based revenues may not correspond with contractual increases in wage rates and other inflationary increases in cost elements and, as a result, could adversely impact our operating results. ​ Generally, inflationary increases in labor and operating costs related to our Asset-Light operations have historically been offset through price increases.
The timing and extent of base price increases on our Asset-Based revenues may not correspond with contractual increases in wage rates and other inflationary increases in cost elements and, as a result, could adversely impact our operating results.
ABF Freight contributes to other multiemployer health, welfare, and pension plans based generally on the time worked by their contractual employees, as specified in the collective bargaining agreement and other supporting supplemental agreements (see Multiemployer Plans within Note J to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). ​ Capital Expenditures ​ The following table sets forth our capital expenditures for the periods indicated below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ 2022 2021 2020 ​ ​ (in thousands) Capital expenditures, gross including notes payable (1) ​ $ 230,648 ​ $ 118,112 ​ $ 105,051 ​ Less financing from notes payable and finance lease obligations ​ 82,425 ​ 59,700 ​ 61,803 ​ Capital expenditures, net of notes payable and finance leases ​ 148,223 ​ 58,412 ​ 43,248 ​ Less proceeds from asset sales ​ 19,691 ​ 13,815 ​ 13,348 ​ Total capital expenditures, net ​ $ 128,532 ​ $ 44,597 ​ $ 29,900 ​ (1) Actual capital expenditures in 2022 and 2021 fell below our estimates due to delays in the original build schedules of our Asset-Based and Asset-Light revenue equipment caused by parts shortages and manufacturing disruptions.
ABF Freight contributes to other multiemployer health, welfare, and pension plans based generally on the time worked by their contractual employees, as specified in the collective bargaining agreement and other supporting supplemental agreements (see Multiemployer Plans within Note K to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). ​ Capital Expenditures ​ The following table sets forth our capital expenditures for the periods indicated below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31 ​ 2023 2022 2021 ​ ​ (in thousands) Capital expenditures, gross including notes payable (1) ​ $ 252,516 ​ $ 230,648 ​ $ 118,112 ​ Less financing from notes payable ​ 33,495 ​ 82,425 ​ 59,700 ​ Capital expenditures, net of notes payable ​ 219,021 ​ 148,223 ​ 58,412 ​ Less proceeds from asset sales ​ 7,763 ​ 19,691 ​ 13,815 ​ Total capital expenditures, net ​ $ 211,258 ​ $ 128,532 ​ $ 44,597 ​ (2) Actual capital expenditures in 2023 and 2022 fell below our estimates due to delays in the original build schedules of our Asset-Based and Asset-Light revenue equipment caused by parts shortages and manufacturing disruptions and, for 2023, delays in some real estate facility projects. ​ For 2024, our total capital expenditures, including amounts financed, are estimated to range from $325.0 million to $375.0 million, net of asset sales.
We funded capital expenditures, net of proceeds from asset sales, of $128.5 million in 2022, including property purchases and the renovation of properties for our Asset-Based network; financed an additional $82.4 million of revenue equipment for our Asset-Based operations; and invested $17.3 million in internally developed software.
We funded capital expenditures, net of proceeds from asset sales and equipment financings, of $211.2 million in 2023, including property purchases and the renovation of properties for our Asset-Based network; financed an additional $33.5 million of revenue equipment for our Asset-Based operations; and invested $12.7 million in internally developed software.
The marketplace pricing environment has been positive and rational in support of our efforts to secure needed price increases; however, the competitive environment could limit the Asset-Based segment from securing adequate increases in base LTL freight rates and could limit the amount of fuel surcharge revenue recovered in future periods. ​ Asset-Based Operating Income The Asset-Based segment generated operating income of $381.1 million in 2022, compared to $260.7 million in 2021, with an operating ratio of 87.3% and 89.9%, respectively.
The marketplace pricing environment has remained rational which has benefited our efforts to secure needed price increases, and pricing was strong during the market disruption of 2023; however, the competitive environment could limit the Asset-Based segment from securing adequate increases in base LTL freight rates and could limit the amount of fuel surcharge revenue recovered in future periods. ​ Asset-Based Operating Income The Asset-Based segment generated operating income of $253.2 million in 2023, compared to $381.1 million in 2022, with an operating ratio of 91.2% and 87.3%, respectively.
Total salaries, wages, and benefits, amounted to 43.0% and 46.6% of revenues for 2022 and 2021, respectively.
Total salaries, wages, and benefits, amounted to 48.1% and 43.0% of revenues for 2023 and 2022, respectively.
As pre-tax income or pre-tax losses increase, the impact of non-deductible expenses on the overall rate declines. ​ We had net deferred tax liabilities after valuation allowances of $54.9 million and $59.4 million at December 31, 2022 and 2021, respectively. Valuation allowances for deferred tax assets totaled $1.7 million and $2.2 million at December 31, 2022 and 2021, respectively.
As pre-tax income or pre-tax losses increase, the impact of non-deductible expenses on the overall rate declines. ​ We had net deferred tax liabilities after valuation allowances from continuing operations of $47.6 million and $54.2 million at December 31, 2023 and 2022, respectively.
These statistics are defined within the key indicators below and referred to throughout the discussion of the results of our Asset-Light operations: ​ ● Customer demand for logistics and premium transportation services combined with economic factors which influence the number of shipments or service events used to measure changes in business levels, primarily measured by: ​ Shipments per day – total shipments (excluding managed transportation solutions as discussed below) divided by the number of working days during the period, compared to the same prior-year period, for the ArcBest segment. ​ Service events – roadside, preventative maintenance, or total service events during the period, compared to the same prior-year period, for the FleetNet segment. ​ ● Prices obtained for services, primarily measured by: ​ Revenue per shipment or event – total segment revenue divided by total segment shipments or events during the period (excluding managed transportation solutions for the ArcBest segment as discussed below), compared to the same prior-year period. ​ ● Availability of market capacity and cost of purchased transportation to fulfill customer shipments of the ArcBest segment, with a measure of purchased transportation cost expressed as: ​ Purchased transportation costs as a percentage of revenue – the expense incurred for third-party transportation providers to haul or deliver freight during the period, divided by segment revenues for the period, expressed as a percentage. ​ ● Management of operating costs, primarily in the area of purchased transportation, with the total cost structure primarily measured by: ​ Operating ratio – the percent of operating expenses to revenue levels. ​ Presentation and discussion of the key operating statistics of revenue per shipment and shipments per day for the ArcBest segment exclude statistical data of our managed transportation solutions transactions.
These statistics are defined within the key indicators below and referred to throughout the discussion of the results of our Asset-Light segment: ​ ● Customer demand for logistics and premium transportation services, primarily measured by: ​ Shipments per day – total shipments divided by the number of working days during the period, compared to the same prior-year period. ​ ● Prices obtained for services, primarily measured by: ​ Revenue per shipment – total segment revenue divided by total segment shipments during the period, compared to the same prior-year period. ​ ● Availability of market capacity and cost of purchased transportation to fulfill customer shipments, with a measure of purchased transportation cost expressed as: ​ Purchased transportation costs as a percentage of revenue – the expense incurred for third-party transportation providers to haul or deliver freight during the period, divided by segment revenues for the period, expressed as a percentage. ​ ● Management of operating costs, primarily in the area of purchased transportation, with the total cost structure primarily measured by: ​ Operating ratio – the percent of operating expenses to revenue levels. ​ Presentation and discussion of the key operating statistics of revenue per shipment and shipments per day for the Asset-Light segment previously excluded statistical data of our managed transportation solutions transactions, as inclusion of the data resulted in key operating statistics which were not representative of the operating results of the segment as a whole due to the nature of our managed transportation solutions, which typically involve a larger number of shipments at a significantly lower revenue per shipment level than the segment’s other service offerings.
As of December 31, 2022, the fair value of the outstanding contingent earnout consideration of $112.0 million related to the acquisition of MoLo was recorded in other long-term liabilities.
As of December 31, 2023, the fair value of the outstanding contingent earnout consideration of $92.9 million related to the acquisition of MoLo was recorded in long-term liabilities as the 2023 target was not achieved.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur Credit Facility, accounts receivable securitization program, interest rate swap agreement, and notes payable are further described in Note H to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ We have finance lease arrangements to finance certain equipment as disclosed in Note G to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Biggest changeOur Credit Facility, accounts receivable securitization program, interest rate swap agreement, and notes payable are further described in Note I to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ​ Liabilities associated with the supplemental benefit plan and the postretirement health benefit plan are remeasured on an annual basis (and upon curtailment or settlement, if applicable) using the applicable discount rates at the measurement date.
Our debt portfolio includes notes payable to finance the purchase of certain revenue equipment, other equipment, and software with a fixed rate of interest, which mitigates the impact of fluctuations in interest rates. Future issuances of notes payable could be impacted by increases in interest rates, which could result in higher interest costs.
Our debt portfolio includes notes payable to finance the purchase of certain revenue equipment and other equipment with a fixed rate of interest, which mitigates the impact of fluctuations in interest rates. Future issuances of notes payable could be impacted by increases in interest rates, which could result in higher interest costs.
A 10% change in market value of these investments would have a $2.3 million impact on income before income taxes. ​ We are subject to market risk for increases in diesel fuel prices; however, this risk is mitigated somewhat by fuel surcharge revenues, which are charged based on an index of national diesel fuel prices.
A 10% change in market value of these investments would have a $2.6 million impact on income before income taxes. ​ We are subject to market risk for increases in diesel fuel prices; however, this risk is mitigated somewhat by fuel surcharge revenues, which are charged based on an index of national diesel fuel prices.
We have not historically engaged in a program for fuel price hedging and did not have any fuel hedging agreements outstanding at December 31, 2022 and 2021. ​ Operations outside of the United States are not significant to total revenues or assets, and, accordingly, we do not have a formal foreign currency risk management policy.
We have not historically engaged in a program for fuel price hedging and did not have any fuel hedging agreements outstanding at December 31, 2023 and 2022. ​ Operations outside of the United States are not significant to total revenues or assets, and, accordingly, we do not have a formal foreign currency risk management policy.
The interest rate swap effectively converts $50.0 million of borrowings under our Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.55% based on the margin of our Credit Facility as of December 31, 2022.
The interest rate swap effectively converts $50.0 million of borrowings under our Credit Facility from variable-rate interest to fixed-rate interest with a per annum rate of 1.55% based on the margin of our Credit Facility as of December 31, 2023.
We have not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. ​ ​ ​ 63 Table of Contents
We have not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. ​ ​ ​ 67 Table of Contents
Revenues from non-U.S. operations amounted to less than 4% and 5% of total consolidated revenues for 2022 and 2021, respectively. Foreign currency exchange rate fluctuations have not had a material impact on our consolidated financial statements, and they are not expected to in the foreseeable future.
Revenues from non-U.S. operations amounted to less than 2% and 4% of total consolidated revenues for 2023 and 2022, respectively. Foreign currency exchange rate fluctuations have not had a material impact on our consolidated financial statements, and they are not expected to in the foreseeable future.
The portion of cash surrender value of life insurance policies subject to market volatility was $23.0 million and $26.9 million at December 31, 2022 and 2021, respectively.
The portion of cash surrender value of life insurance policies subject to market volatility was $25.7 million and $23.0 million at December 31, 2023 and 2022, respectively.
Although the fair values of these instruments can fluctuate, we believe that the short-term, liquid nature of these instruments and our ability to hold these instruments to maturity reduces our risk for potential material losses. ​ Debt .
Our short-term investments at December 31, 2023 were principally composed of certificates of deposit, and at December 31, 2022, short-term investments also included U.S. government securities. 66 Table of Contents Although the fair values of these instruments can fluctuate, we believe that the short-term, liquid nature of these instruments and our ability to hold these instruments to maturity reduces our risk for potential material losses. ​ Debt .
At December 31, 2022 and 2021, cash, cash equivalents, and short-term investments totaled $326.0 million and $125.0 million, respectively. Substantially all cash equivalents were in demand accounts with financial institutions. Our short-term investments were principally composed of certificates of deposit and U.S. government securities.
At December 31, 2023 and 2022, cash, cash equivalents, and short-term investments totaled $330.1 million and $325.9 million, respectively. Substantially all cash equivalents were in demand accounts with financial institutions.
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The monthly base rent for the lease terms is 62 Table of Contents specified in the lease agreements and is not subject to interest rate changes.
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We could enter into additional finance lease arrangements that will be subject to changes in interest rates. ​ Liabilities associated with the supplemental benefit plan and the postretirement health benefit plan are remeasured on an annual basis (and upon curtailment or settlement, if applicable) using the applicable discount rates at the measurement date.

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