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What changed in Hub Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hub Group, Inc.'s 2023 and 2024 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 2024 report.

+211 added−221 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in Hub Group, Inc.'s 2024 10-K

211 paragraphs added · 221 removed · 177 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe also are investing in new technologies such as electric-powered tractors that offer attractive environmental benefits to us and our customers. Our GPS-enabled container fleet allows for our truck drivers and third-party carriers to efficiently locate our containers without driving wasted miles.
Biggest changeOur GPS-enabled container fleet allows for our truck drivers and third-party carriers to efficiently locate our containers without driving wasted miles. We are an Environmental Protection Agency (EPA) SmartWay® Transport Partner, having been awarded the EPA’s SmartWay® Excellence Award nine times since its inception.
Meents joined Hub Group in 2009 and held roles with increasing responsibility in business development, as Vice President of Account Management, where he focused on the development of client relationships, account strategy and innovation, and as Executive Vice President of Account Management, Sales, and Marketing. In addition to his responsibilities at Hub, Mr.
Meents joined Hub Group in 2009 and held roles with increasing responsibility in business development, as Vice President of Account Management, where he focused on the development of client relationships, account strategy and innovation, and as Executive Vice President of Account Management, Sales, and Marketing. In addition to his responsibilities at Hub Group, Mr.
We are not a party to any collective bargaining agreements and consider our relationship with our employees to be satisfactory. Hub’s success depends in part on our ability to attract and retain skilled staff members, drivers and warehouse employees. Our executive management team receives regular updates regarding headcount changes, turnover rates, hiring rates, manager training and employee satisfaction.
We are not a party to any collective bargaining agreements and consider our relationship with our employees to be satisfactory. Our success depends in part on our ability to attract and retain skilled staff members, drivers and warehouse employees. Our executive management team receives regular updates regarding headcount changes, turnover rates, hiring rates, manager training and employee satisfaction.
We also carry general and auto liability insurance with an umbrella policy to cover potential exposure from our company-owned drayage and dedicated operations. Government Regulations The Company and several of our subsidiaries are licensed by the United States Department of Transportation (“DOT”) as brokers in arranging for the transportation of general commodities by motor vehicle.
We also carry general and auto liability insurance with an umbrella policy to cover potential exposure from our company-owned drayage and dedicated operations. 4 Government Regulations We and several of our subsidiaries are licensed by the United States Department of Transportation (“DOT”) as brokers in arranging for the transportation of general commodities by motor vehicle.
Bansal served as Senior Vice President of Application Development and was responsible for the development, configuration, and delivery of Hub’s software as well as the product development strategy, architecture, and technical solutions. Mr. Bansal has spent over 20 years in engineering and product development roles. Before joining Hub in 2020, Mr.
Bansal served as Senior Vice President of Application Development and was responsible for the development, configuration, and delivery of Hub’s software as well as the product development strategy, architecture, and technical solutions. Mr. Bansal has spent over 20 years in engineering and product development roles. Before joining Hub Group in 2020, Mr.
Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation services and final mile delivery.
Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, cross-docking, consolidation & fulfillment services and final mile delivery.
These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs.
These assets and contractual services are used to support drayage for our intermodal service 3 offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs.
We contract with approximately 460 owner-operators who supply their own equipment and operate under our regulatory authority. We also procure drayage services from third parties, and we believe we are one of the largest purchasers of drayage transportation in the United States. Our brokerage and logistics business lines are significant purchasers of truckload and less-than-truckload transportation from third parties.
We contract with approximately 500 owner-operators who supply their own equipment and operate under our regulatory authority. We also procure drayage services from third parties, and we believe we are one of the largest purchasers of drayage transportation in the United States. Our brokerage and logistics business lines are significant purchasers of truckload and less-than-truckload transportation from third parties.
Due to the importance of our relationship, some of our railroad providers have dedicated support personnel to focus on our day-to-day service requirements. On a regular basis, our senior executives and our railroad providers meet to discuss major strategic issues concerning intermodal transportation. Approximately 78% of our drayage services are provided by our fleet.
Due to the importance of our relationship, some of our railroad providers have dedicated support personnel to focus on our day-to-day service requirements. On a regular basis, our senior executives and our railroad providers meet to discuss major strategic issues concerning intermodal transportation. Approximately 73% of our drayage services are provided by our fleet.
Our intermodal and transportation solutions segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. Our service offering is well positioned to assist our customers in reducing their transportation spend and achieving their carbon emissions objectives.
Our ITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. Our service offering is well positioned to assist our customers in reducing their transportation spend and achieving their carbon emissions objectives.
Today we generate over $4 billion in annual revenue, having grown through the addition of new customers, through cross-selling our services to our customer base, by investing in equipment such as containers and tractors, by developing new service offerings, and through the acquisitions of new business lines.
Today we generate approximately $4 billion in annual revenue, having grown through the addition of new customers, through cross-selling our services to our customer base, by investing in equipment such as containers and tractors, by developing new service offerings, and through the acquisitions of new business lines.
Our business operates or has access to approximately 11 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations.
Our business operates or has access to approximately 7 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations.
Our final mile operation contracts with nearly 570 vendors across the United States who provide warehousing and delivery services. 4 We require all of our trucking vendors to carry auto liability and cargo insurance. Railroads, which typically carry higher self-insured retentions, provide limited cargo protection. To cover freight loss or damage we carry our own cargo insurance.
Our final mile operation contracts with nearly 540 vendors across the United States who provide warehousing and delivery services. We require all of our trucking vendors to carry auto liability and cargo insurance. Railroads, which typically carry higher self-insured retentions, provide limited cargo protection. To cover freight loss or damage we carry our own cargo insurance.
Meents serves on the board of the University of Denver’s Transportation and Supply Chain Institute. Mr. Meents received his Bachelor’s degree from North Central College and an Executive Master’s degree in Transportation from the University of Denver.
Meents serves on the board of the University of Denver’s Transportation and Supply Chain Institute. Mr. Meents received his bachelor’s degree from North Central College and an Executive Master’s degree in Transportation from the University of Denver. Kevin W.
Yeager formerly held the role of Executive Vice President, Account Management and Intermodal Operations since January 2016 after serving as Vice President of Account Management and Business Development from February 2014 to January 2016. Mr. Yeager joined the Company in 2011 as the Director of Strategy and Acquisitions. Prior to joining the Company, Mr.
Yeager formerly held the role of Executive Vice President, Account Management and Intermodal Operations since January 2016 after serving as Vice President of Account Management and Business Development from February 2014 to January 2016. Mr. Yeager joined Hub Group in 2011 as the Director of Strategy and Acquisitions. Prior to joining Hub, Mr.
We seek to offer a competitive compensation package, which may include incentive compensation elements, as well as an attractive package of employee benefits. We are committed to employee engagement and an inclusive culture that values and respects every employee. Hub strives to create a culture of accountability, safety and teamwork.
We seek to offer a competitive compensation package, which may include incentive compensation elements, as well as an attractive package of employee benefits. We are committed to employee engagement and an inclusive culture that values and respects every employee. We strive to create a culture of accountability, safety and teamwork.
Beth served as Executive Vice President and Chief Accounting Officer since July 2020 where he transformed Hub Group’s financial systems and was instrumental in leading the accounting organization through the integration of acquisitions, divestitures and the implementation of new accounting standards. Mr.
Beth served as Executive Vice President and Chief Accounting Officer since July 2020 where he transformed Hub’s financial systems and was instrumental in leading the accounting organization through the integration of acquisitions, divestitures and the implementation of new accounting standards. Mr.
Beth received a Bachelor of Science degree in Accounting from the University of Illinois. 6 Dhruv Bansal was named Executive Vice President and Chief Information Officer in March 2022. Previously, Mr.
Beth received a Bachelor of Science degree in Accounting from the University of Illinois at Urbana-Champaign. 6 Dhruv Bansal was named Executive Vice President and Chief Information Officer in March 2022. Previously, Mr.
We set annual performance goals for our operations teams relative to collisions and injuries and track performance monthly to ensure accountability.
We set annual performance goals for our operations teams relative to accidents and injuries and track performance monthly to ensure accountability.
Human Capital Hub conducts business with and provides services to customers through a combination of office employees, driver employees and warehouse employees. We also contract with independent contractors and with staffing firms who provide personnel who provide their services in our warehouse operations.
Human Capital We conduct business with and provide services to customers through a combination of office employees, driver employees and warehouse employees. We also contract with independent contractors and with staffing firms who provide personnel who provide their services in our warehouse operations.
Beth joined the Company in October 2003 as Corporate Controller and served as Controller and Assistant Treasurer beginning in March 2007. Mr. Beth is a Certified Public Accountant and held various auditing and corporate accounting positions prior to joining the Company. Mr.
Beth joined Hub Group in October 2003 as Corporate Controller and served as Controller and Assistant Treasurer beginning in March 2007. Mr. Beth is a Certified Public Accountant and held various auditing and corporate accounting positions prior to joining Hub Group. Mr.
As of December 31, 2023, we owned approximately 50,000 dry, 53-foot containers and 900 refrigerated 53-foot containers. As of December 31, 2023, our trucking transportation operation consisted of approximately 2,300 tractors, 2,900 employee drivers and 4,300 trailers. We also contract for services with approximately 460 independent owner-operators who supply their own equipment and operate under our regulatory authority.
As of December 31, 2024, we owned approximately 50,000 dry, 53-foot containers and 900 refrigerated 53-foot containers. As of December 31, 2024, our trucking transportation operation consisted of approximately 2,300 tractors, 3,200 employee drivers and 4,700 trailers. We also contract for services with approximately 500 independent owner-operators who supply their own equipment and operate under our regulatory authority.
LaFrance became our Executive Vice President, Chief Legal and Human Resources Officer and Corporate Secretary in February 2024 after joining the Company as Executive Vice President, General Counsel and Corporate Secretary in August 2021. In this role, Mr. LaFrance leads the Company’s legal, claims and compliance, and human resource efforts. Mr.
LaFrance became our Executive Vice President, Chief Legal and Human Resources Officer and Corporate Secretary in February 2024 after joining Hub Group as Executive Vice President, General Counsel and Corporate Secretary in August 2021. In this role, Mr. LaFrance leads our legal, claims and compliance, and human resource efforts. Mr.
Yeager is the father of Phillip D. Yeager. Phillip D. Yeager became our President and Chief Executive Officer on January 1, 2023 and was appointed Vice Chairman of the Board of Directors in February 2024. Previously Mr.
Yeager became our President and Chief Executive Officer on January 1, 2023 and was appointed Vice Chairman of the Board of Directors in February 2024. Previously Mr.
During 2023, approximately 78% of Hub’s drayage needs were provided by our own fleet, which includes our drivers and tractors and owner operators with whom we contracted operating under our motor carrier authority. As of December 31, 2023, we operated trucking terminals at 26 locations throughout the United States, with locations in many large metropolitan areas. Logistics .
During 2024, approximately 73% of our drayage needs were provided by our own fleet, which includes our drivers and tractors and owner operators with whom we contracted operating under our motor carrier authority. As of December 31, 2024, we operated trucking terminals at 32 locations throughout the United States and Mexico, with locations in many large metropolitan areas. Logistics .
The Company is also subject to various federal, state and local laws and government regulations related to employment in the jurisdictions where we conduct business. Complying with these and other laws and regulations has not had a materially adverse effect on the Company’s business.
We are also subject to various federal, state, local and international laws and government regulations related to employment in the jurisdictions where we conduct business. Complying with these and other laws and regulations has not had a materially adverse effect on our business.
The table sets forth certain information as of February 1, 2024 with respect to each person who is an executive officer of the Company. Name Age Position David P. Yeager 70 Executive Chairman of the Board of Directors Phillip D. Yeager 36 Vice Chairman of the Board of Directors, President and Chief Executive Officer Brian D.
The table sets forth certain information as of February 1, 2025 with respect to each person who is an executive officer of our Company. Name Age Position David P. Yeager 71 Executive Chairman of the Board of Directors Phillip D. Yeager 37 Vice Chairman of the Board of Directors, President and Chief Executive Officer Brian H.
Louis office in 1980 and served as its President from 1980 to 1983. Mr. Yeager founded our Pittsburgh office in 1975 and served as its President from 1975 to 1977. Mr. Yeager received a Masters of Business Administration degree from the University of Chicago Booth School of Business and a Bachelor of Arts degree from the University of Dayton. Mr.
Yeager founded our Pittsburgh office in 1975 and served as its President from 1975 to 1977. Mr. Yeager received a Masters of Business Administration degree from the University of Chicago Booth School of Business and a Bachelor of Arts degree from the University of Dayton. Mr. Yeager is the father of Phillip D. Yeager. Phillip D.
To date, compliance with these regulations and licensing requirements has not had a material adverse effect on our capital expenditures, earnings or competitive position. There are federal, state and local laws and regulations concerning environmental matters and employee health and safety that apply to the Company’s operations.
To date, compliance with these regulations and licensing requirements has not had a material adverse effect on our capital expenditures, earnings or competitive position. EASO is also subject to transportation regulations in Mexico. There are federal, state, local and international laws and regulations concerning environmental matters and employee health and safety that apply to our operations.
Meents 39 Executive Vice President, Chief Marketing Officer and President of Intermodal and Transportation Solutions David P. Yeager has served as the Executive Chairman of our Board of Directors since January 2023. Mr. Yeager previously served as Chairman of the Board between November 2008 and December 2022 and as Chief Executive Officer between March 1995 and December 2022.
Yeager has served as the Executive Chairman of our Board of Directors since January 2023. Mr. Yeager previously served as Chairman of the Board between November 2008 and December 2022 and as Chief Executive Officer between March 1995 and December 2022. From March 1995 through November 2008, Mr. Yeager served as Vice Chairman of the Board.
Our recent strategic transactions include the following: Forward Air Final Mile Acquisition. On December 20, 2023, we acquired 100% of the equity interests of Forward Air Final Mile (“FAFM”). FAFM provides residential last mile delivery services and installation of big and bulky goods, with a focus on appliances, throughout the United States.
On December 20, 2023, we acquired 100% of the equity interests of Forward Air Final Mile (“FAFM”). FAFM provides residential last mile delivery services and installation of big and bulky goods, with a focus on appliances, throughout the United States. The financial results of FAFM, since the date of acquisition, are included in our Logistics segment. TAGG Acquisition.
From March 1995 through November 2008, Mr. Yeager served as Vice Chairman of the Board. From October 1985 through December 1991, Mr. Yeager was President of Hub City Terminals (Hub Chicago). From 1983 to October 1985, he served as Vice President, Marketing of Hub Chicago. Mr. Yeager founded our St.
From October 1985 through December 1991, Mr. Yeager was President of Hub City Terminals (Hub Chicago). From 1983 to October 1985, he served as Vice President, Marketing of Hub Chicago. Mr. Yeager founded our St. Louis office in 1980 and served as its President from 1980 to 1983. Mr.
The acquisition expanded our presence in the consolidation and fulfillment space and added a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs. The acquisition added scale to our logistics service line and has enabled cross-selling opportunities. The financial results of TAGG, since the date of acquisition, are primarily included in our Logistics segment. Choptank Acquisition.
On August 22, 2022, we acquired 100% of the equity interests of TAGG Logistics, LLC (“TAGG” ). The acquisition expanded our presence in the consolidation and fulfillment space and added a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs. The acquisition added scale to our logistics service line and has enabled cross-selling opportunities.
Our business is seasonal to the extent that certain customer groups and their shipping demand, such as retail, are seasonal. A significant portion of our revenue and earnings is related to the provision of services to customers who serve consumer end markets in North America.
A significant portion of our revenue and earnings is related to the provision of services to customers who serve consumer end markets in North America.
As of December 31, 2023, Hub had approximately 5,950 employees, which included approximately 2,900 drivers and 1,050 warehouse employees. In addition, as of December 31, 2023, we contracted with approximately 460 independent contractor drivers and had approximately 530 contractors working in our warehouse locations.
As of December 31, 2024, we had approximately 6,500 employees, which included approximately 3,200 drivers and 900 warehouse employees. In addition, as of December 31, 2024, we contracted with approximately 500 independent contractor drivers and had approximately 750 contractors working in our warehouse locations.
Alexander 44 Executive Vice President and Chief Operating Officer Kevin W. Beth 49 Executive Vice President, Chief Financial Officer and Treasurer Dhruv Bansal 48 Executive Vice President and Chief Information Officer Thomas P. LaFrance 62 Executive Vice President, Chief Legal and Human Resource Officer and Corporate Secretary Brian H.
Meents 40 Executive Vice President and Chief Operating Officer Kevin W. Beth 50 Executive Vice President, Chief Financial Officer and Treasurer Dhruv Bansal 49 Executive Vice President and Chief Information Officer Thomas P. LaFrance 63 Executive Vice President, Chief Legal and Human Resource Officer and Corporate Secretary Brent M. Rhodes 35 Executive Vice President and Chief Accounting Officer David P.
Alexander earned a Bachelor of Business Administration degree from Marquette University and Masters of Business Administration degree from Cardinal Stritch University. Kevin W. Beth was named Executive Vice President, Chief Financial Officer and Treasure on January 1, 2024 with responsibility over the organization’s financial activities, acquisitions, investor relations and relationships with the company’s lenders. Prior to this role, Mr.
Beth was named Executive Vice President, Chief Financial Officer and Treasurer on January 1, 2024 with responsibility over the organization’s financial activities, acquisitions, investor relations and banking relationships. Prior to this role, Mr.
LaFrance graduated with a Bachelor of Arts degree in Economics from Boston College and received his J.D. from Georgetown University Law Center. Brian Meents became our Executive Vice President, Chief Marketing Officer and President of Intermodal and Transportation Solutions in February 2024 after previously holding the role of Executive Vice President, Chief Marketing Officer since 2023. Mr.
Brian Meents became our Executive Vice President and Chief Operating Officer in November 2024, after previously holding the role of Executive Vice President, Chief Marketing Officer and President of Intermodal and Transportation Solutions since February 2024 and Executive Vice President, Chief Marketing Officer since 2023. Mr.
Meents is responsible for our intermodal business as well as pricing, analytics, continuous improvement, and marketing. Mr.
Meents is responsible for our intermodal, managed transportation, and consolidation and fulfillment service lines, as well as pricing, analytics, continuous improvement, customer success and account management. Mr.
We employ sales and marketing representatives throughout North America who service local, regional and national accounts. We believe that fostering long-term customer relationships is critical to our success and allows us to better understand our customers’ needs and specifically tailor the transportation and logistics services we provide to them.
We believe that fostering long-term customer relationships is critical to our success and allows us to better understand our customers’ needs and specifically tailor the transportation and logistics services we provide to them. Our business is seasonal to the extent that certain customer groups and their shipping demand, such as retail, are seasonal.
We are an Environmental Protection Agency (EPA) SmartWay® Transport Partner, having been awarded the EPA’s SmartWay® Excellence Award nine times since 2008. Our headquarter buildings in Oak Brook, IL are certified as “Gold” by the Leadership in Energy and Environmental Design (LEED®) organization.
Our headquarter buildings in Oak Brook, IL are certified as “Gold” by the Leadership in Energy and Environmental Design (LEED®) organization.
Our Logistics segment includes full outsource logistics solutions, transportation management services, freight consolidation, warehousing and fulfillment, and final mile delivery services. Logistics also includes our brokerage business which provides third-party truckload, less-than-truckload (“LTL”), flatbed and temperature-controlled needs. We are one of the largest freight transportation providers in North America.
Logistics also includes our brokerage business which provides third-party truckload, less-than-truckload (“LTL”), flatbed and temperature-controlled needs. We are one of the largest freight transportation providers in North America. We service a large and diversified customer base in a broad range of industries, including retail, consumer products, automotive and durable goods.
Beginning in the first quarter of 2023, we concluded that we have two reportable segments: Intermodal and Transportation Solutions (“ITS”) and Logistics which are based primarily on the services each segment provides. We have recast the prior period information to conform with current year presentation. Our ITS segment includes our intermodal and dedicated trucking.
We have two reportable segments: Intermodal and Transportation Solutions (“ITS”) and Logistics which are based primarily on the services each segment provides. Our ITS segment includes our intermodal and dedicated trucking. Our Logistics segment includes full outsource logistics solutions, transportation management services, consolidation and fulfillment services and final mile delivery services.
Hub services a large and diversified customer base in a broad range of industries, including retail, consumer products, automotive and durable goods. We believe our strategy to offer multi-modal supply chain management solutions serves to strengthen and deepen our relationships with our customers and allows us to provide a more cost effective and higher service solution.
We believe our strategy to offer multi-modal supply chain management solutions serves to strengthen and deepen our relationships with our customers and allows us to provide a more cost effective and higher service solution. We employ sales and marketing representatives throughout North America who service local, regional and national accounts.
As a result, beginning in the first quarter of 2023, we concluded we have two reportable segments - Intermodal and Transportation Solutions and Logistics, which are based primarily on the services each segment provides. We have recast the prior period information to conform with current year presentation. We operate the following segments: 3 Intermodal and transportation solutions.
The financial results of TAGG, since the date of acquisition, are included in our Logistics segment. Services Provided We have two reportable segments: Intermodal and Transportation Solutions (“ITS”) and Logistics which are based primarily on the services each segment provides. Intermodal and transportation solutions.
For example, over the past several years we have invested in a fleet of refrigerated intermodal containers that represents a new service line which we marketed to our existing customer base. We regularly evaluate acquisitions as a component of our strategy to enhance our core business lines and diversify our service offerings.
We regularly evaluate acquisitions as a component of our strategy to enhance our core business lines and diversify our service offerings. Our recent strategic transactions include the following: EASO Transaction.
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As we have continued to expand our service offerings and diversify our business, we have also made changes to the financial information that our CEO, who has been identified as our Chief Operating Decision Maker (CODM), uses to make operating and capital decisions.
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On October 23, 2024, we entered into an investment agreement with Corporación Interamericana de Logística, S.A. de C.V. and certain associated entities (commonly known as “ EASO ” ), a family-led, intermodal and trucking logistics provider headquartered in Mexico City to acquire a controlling interest in EASO. EASO specializes in intermodal, dedicated trucking, truckload and freight brokerage services.
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Consistent with our strategy of acquiring companies that strengthen our offering to our customers, in 2022 we achieved system integration of Choptank and TAGG into our tech landscape which enabled cross-selling of our brokerage and fulfillment services for our expended customer base. We expect to complete the same type of integration with the Forward Air Final Mile business during 2024.
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Through a network of terminals across Mexico, EASO serves the entire Mexican domestic market and main logistics hubs in the U.S. using its intermodal cross-border network. The financial results of EASO, since the date of acquisition, are included in our ITS segment. Forward Air Final Mile Acquisition.
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The financial results of FAFM, since the date of acquisition, are included in our Logistics segment. TAGG Acquisition. On August 22, 2022, we acquired 100% of the equity interests of TAGG Logistics, LLC (“TAGG” ).
Added
LaFrance graduated with a Bachelor of Arts degree in Economics from Boston College and received his J.D. from Georgetown University Law Center. Brent Rhodes joined Hub Group as Executive Vice President and Chief Accounting Officer in 2024. Prior to joining Hub Group, Mr.
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On October 19, 2021, we acquired 100% of the equity interests of Choptank Transport, LLC (“Choptank”). The acquisition added scale to our truck brokerage operation, enhanced our refrigerated trucking transportation services offering and complemented our growing fleet of refrigerated intermodal containers. The financial results of Choptank, since the date of acquisition, are primarily included in our Logistics segment.
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Rhodes served as Chief Accounting Officer of ATI Physical Therapy, including through the period when ATI became a publicly traded company. Prior to ATI, Mr. Rhodes held various positions in the Audit and Transaction Services groups of Deloitte & Touche LLP since 2012. Mr.
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Services Provided As part of our profit improvement initiatives, we have focused on realizing efficiencies between our drayage trucking operation (which supports our intermodal service) and our dedicated trucking operation, including through the sharing of equipment and drivers, and by leveraging a combined set of driver support services including driver recruiting, asset management and safety functions.
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Rhodes is a Certified Public Accountant and received his Master’s and Bachelor’s degrees in Accountancy from the University of Illinois at Urbana-Champaign.
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Brian D. Alexander became our Executive Vice President and Chief Operating Officer on January 1, 2023. Mr. Alexander previously served as Executive Vice President, Logistics between September 2015 and December 2022. Before being named Executive Vice President, Mr.
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Alexander served as Vice President of Operations of Logistics from December 2010 to September 2015 and was responsible for the operational execution and excellence for manufacturing, retail and consumer packaged goods clients. Prior to that, Mr. Alexander was Senior Director of Strategic Accounts, where he had a ten-year history of managing and directing continuous improvement initiatives for key accounts. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeNumerous competitive factors could impair our ability to maintain our current profitability, including the following: • our competitors may periodically reduce their prices to gain business, especially during times of weak economic conditions, which may limit our ability to maintain or increase prices or impede our ability to maintain or grow our customer relationships; • our inability to achieve expected customer retention levels or sales growth targets; • we compete with many other transportation and logistics service providers, some of which have greater capital resources or lower cost structures than us; • our inability to compete with new entrants in the transportation and logistics market that may offer similar services at lower cost or have greater technological capabilities, including capabilities offering lower greenhouse gas (“GHG”) emissions with competitive pricing; • customers may choose to provide for themselves the services that we now provide; • many customers periodically accept proposals from multiple carriers for their shipping needs, and this process may depress rates or result in the loss of some of our business to competitors; • consolidation in the trucking industry may result in larger competitors with greater financial resources than we have; • disruptions to the supply chain or other market factors may limit our ability to purchase equipment from our suppliers; • advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher prices to cover the cost of these investments; and • because cost of capital is a significant competitive factor, any increase in either the cost of our debt or equity as a result of increases in our level of credit risk or stock price volatility could have a significant impact on our competitive position. 8 Our customers’ and suppliers’ businesses may be negatively affected by various economic and other factors such as recessions, downturns in the economy, global uncertainty and instability, the effects of pandemics, the effects of climate change, changes in United States social, political, and regulatory conditions or a disruption of financial markets, which may decrease demand for our services or increase our costs.
Biggest changeNumerous competitive factors could impair our ability to maintain our current profitability, including the following: • our competitors may periodically reduce their prices to gain business, especially during times of weak economic conditions, which may limit our ability to maintain or increase prices or impede our ability to maintain or grow our customer relationships; • our inability to achieve expected customer retention levels or sales growth targets; • we compete with many other transportation and logistics service providers, some of which have greater capital resources or lower cost structures than us; • our inability to compete with new entrants in the transportation and logistics market that may offer similar services at lower cost or have greater technological capabilities, including capabilities offering lower greenhouse gas (“GHG”) emissions with competitive pricing; • customers may choose to provide for themselves the services that we now provide; • many customers periodically accept proposals from multiple carriers for their shipping needs, and this process may depress rates or result in the loss of some of our business to competitors; 8 • consolidation in the trucking industry may result in larger competitors with greater financial resources than we have; • disruptions to the supply chain or other market factors may limit our ability to purchase equipment from our suppliers; • advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher prices to cover the cost of these investments; and • because cost of capital is a significant competitive factor, any increase in either the cost of our debt or equity as a result of increases in our level of credit risk or stock price volatility could have a significant impact on our competitive position.
These factors include, among others: • actual or anticipated variations in earnings, financial or operating performance or liquidity; • changes in industry research analysts’ recommendations or projections; • failure to meet analysts’ and our Company's projections; • general political, social, economic and capital market conditions; • announcements of developments related to our business or the business of our key customers or vendors; • operating and stock performance of other companies deemed to be peers; • actions by government regulators; • news reports of trends, concerns and other issues related to us or our industry, including changes in regulations; and • geopolitical conditions such as acts or threats of terrorism, military conflicts, and the effects of pandemics (such as the coronavirus).
These factors include, among others: • actual or anticipated variations in earnings, financial or operating performance or liquidity; • changes in industry research analysts’ recommendations or projections; • failure to meet analysts’ and our Company's projections; • general political, social, economic and capital market conditions; • announcements of developments related to our business or the business of our key customers or vendors; • operating and stock performance of other companies deemed to be peers; • actions by government regulators; • news reports of trends, concerns and other issues related to us or our industry, including changes in regulations; and • geopolitical conditions such as acts or threats of terrorism, military conflicts, and the effects of pandemics.
Our primary business is to transport, and arrange for the transport of, goods and, as a result, our business levels are directly tied to the purchase and production of goods and the rate of growth or decline in domestic and global trade, which are key macroeconomic measurements influenced by, among other things, inflation and deflation, supply chain disruptions, interest rates and currency exchange rates, labor costs and unemployment levels, regulatory initiatives and other government activity, fuel and energy prices, public health crises, inventory levels, buying patterns and disposable income, debt levels, and credit and capital availability.
Our primary business is to transport, and arrange for the transport of, goods and, as a result, our business levels are directly tied to the purchase and production of goods and the rate of growth or decline in domestic and global trade, which are key macroeconomic measurements influenced by, among other things, inflation and deflation, supply chain disruptions, tariffs, interest rates and currency exchange rates, labor costs and unemployment levels, regulatory initiatives and other government activity, fuel and energy prices, public health crises, inventory levels, buying patterns and disposable income, debt levels, and credit and capital availability.
If contingent workers, including independent contractors and temporary workers used for our trucking, warehousing, consolidation, fulfillment or final mile delivery business, are determined to be employees, or the Company a joint employer, then we may incur legal liabilities associated with that determination, such as liability for unpaid wages, overtime, employee health insurance and taxes.
If contingent workers, including independent contractors and temporary workers used for our trucking, warehousing, consolidation and fulfillment services or final mile delivery business, are determined to be employees, or the Company a joint employer, then we may incur legal liabilities associated with that determination, such as liability for unpaid wages, overtime, employee health insurance and taxes.
These changes could exacerbate the effects of an act of terrorism or other event on our business, resulting in a significant business interruption, increased costs and liabilities and decreased revenues or an adverse impact on results of operation. Our operations are subject to various environmental laws and regulations, including legislative and regulatory responses to climate change.
These changes could exacerbate the effects of an act of terrorism or other event on our business, resulting in a significant business interruption, increased costs and liabilities and decreased revenues or an adverse impact on results of operation. 14 Our operations are subject to various environmental laws and regulations, including legislative and regulatory responses to climate change.
We maintain insurance coverage with third-party insurance carriers for these types of claims as well as for other business and operational risks (including cybersecurity, data privacy, directors & officers), but we assume a significant portion of the risk associated with these claims due to high self-insured retention (“SIR”) and deductibles.
We maintain insurance coverage with third-party insurance carriers for these types of claims as well as for other business and operational risks (including cybersecurity, data privacy, crime, and directors and officers), but we assume a significant portion of the risk associated with these claims due to high self-insured retention (“SIR”) and deductibles.
The costs associated with these matters could have a material adverse effect on results of operations and our financial position. 13 We operate in a highly regulated industry, and changes in existing regulations or costs of compliance with, or liability for violation of, existing or future regulations or antiterrorism measures could have a material adverse effect on our business.
The costs associated with these matters could have a material adverse effect on results of operations and our financial position. We operate in a highly regulated industry, and changes in existing regulations or costs of compliance with, or liability for violation of, existing or future regulations or antiterrorism measures could have a material adverse effect on our business.
Adverse publicity (whether or not justified) relating to activities by our employees, contractors, suppliers, agents or others with whom we do business, such as customer service mishaps or noncompliance with laws, could tarnish our reputation and reduce the value of our brand.
Adverse publicity (whether or not justified) relating to activities by our employees, contractors, suppliers or others with whom we do business, such as customer service mishaps or noncompliance with laws, could tarnish our reputation and reduce the value of our brand.
Even with insurance, if any natural occurrence leads to a catastrophic interruption of service, we may not be able to mitigate a significant interruption in operations. Our insurance program may not be sufficient to cover all anticipated risks and liabilities associated with our operations.
Even with insurance, if any natural occurrence leads to a catastrophic interruption of service, we may not be able to mitigate a significant interruption in operations. 10 Our insurance program may not be sufficient to cover all anticipated risks and liabilities associated with our operations.
We may become subject to enforcement 14 actions, new or more restrictive regulations, or differing interpretations of existing regulations, which may increase the cost of providing transportation services or adversely affect our results of operations.
We may become subject to enforcement actions, new or more restrictive regulations, or differing interpretations of existing regulations, which may increase the cost of providing transportation services or adversely affect our results of operations.
Negative domestic and international global trade conditions as a result of social, political or regulatory changes or perceptions (such as those that might be associated with pandemics or an increased focus on production in the United States), could reduce demand for our intermodal services and materially affect our business, financial conditions and results of operations.
Negative domestic and international global trade conditions as a result of social, political or regulatory changes or perceptions (such as those that might be associated with tariffs or an increased focus on production in the United States), could reduce demand for our intermodal services and materially affect our business, financial conditions and results of operations.
We provide services both domestically and to a lesser extent outside of the United States, which subjects our business to various additional risks, including: 15 • changes in tariffs, trade restrictions, trade agreements and taxes; • varying tax regimes, including consequences from changes in applicable tax laws and tax incentives; • difficulties in managing or overseeing foreign operations and agents; • the burden of complying with laws applicable to international business, such as anti-corruption, trade, foreign currency and maritime laws; • different liability standards; • the price and availability of fuel; • foreign currency exchange rate fluctuations; • exposure to local economic conditions and local laws in the jurisdictions in which we operate; • higher levels of credit risk; • difficulties in integrating acquired companies with foreign operations; • uncertainty and changes to political and regulatory regimes as a result of changing social, political, regulatory and economic environments in the United States and internationally; and • geopolitical conditions, such as national and international conflict, including terrorist acts and the effects of pandemics and government responses to pandemics.
We provide services both domestically and to a lesser extent outside of the United States (including EASO in Mexico), which subjects our business to various additional risks, including: • uncertainty regarding and changes in tariffs, trade restrictions, trade agreements and taxes; • varying tax regimes, including consequences from changes in applicable tax laws and tax incentives; • difficulties in managing or overseeing foreign operations; • the burden of complying with laws applicable to international business, such as anti-corruption, trade, foreign currency and maritime laws; • different liability standards; • the price and availability of fuel; • foreign currency exchange rate fluctuations; • exposure to local economic conditions and local laws in the jurisdictions in which we operate; • higher levels of credit risk; • difficulties in integrating acquired companies with foreign operations; • uncertainty and changes to political and regulatory regimes as a result of changing social, political, regulatory and economic environments in the United States and internationally; and • geopolitical conditions, such as national and international conflict, including terrorist acts and the effects of pandemics and government responses to pandemics.
We are subject to a wide variety of U.S. federal, state and local non-U.S. laws, regulations and government policies, including in the areas of employment, privacy, cybersecurity, securities, anti-corruption, competition and trade, that may change in significant ways.
We are subject to a wide variety of U.S. federal, state and local laws, non-U.S. laws, regulations and government policies, including in the areas of labor and employment (including immigration), privacy, cybersecurity, securities, anti-corruption, competition and trade, that may change in significant ways.
Our operations are affected by external factors such as severe weather and other natural occurrences, which may increase in frequency and severity due to climate change, that adversely impact operating locations where we have vehicles, warehouses and other facilities.
Our operations are affected by external factors such as severe weather and other natural occurrences, which may increase in frequency and severity due to climate change, that adversely impacts operating locations where we have vehicles, warehouses and other facilities.
If we suffer a substantial loss in excess of our self-insured limits, the loss and attendant expenses may be covered by traditional insurance and excess insurance the Company has in place, but if not covered or above such coverages, losses could harm our business, financial condition or results of operations.
If we suffer a substantial loss in excess of our self-insured limits, the loss and attendant expenses may be covered by traditional insurance and excess insurance we have in place, but if not covered or above such coverages, losses could harm our business, financial condition or results of operations.
The Company and various subsidiaries are regulated by the DOT as motor carriers or freight brokers. The DOT prescribes qualifications for acting in these capacities, including surety bond requirements.
We and various subsidiaries are regulated by the DOT as motor carriers or freight brokers. The DOT prescribes qualifications for acting in these capacities, including surety bond requirements.
In each of the years ended December 31, 2023, 2022 and 2021, one customer accounted for more than 10% of our annual revenue in both segments.
In each of the years ended December 31, 2024, 2023 and 2022, one customer accounted for more than 10% of our annual revenue in both segments.
As a result, any decrease in demand for intermodal transportation services could have a material adverse effect on our results of operations. Our 10 largest customers accounted for approximately 42% of our total revenue in 2023, 43% in 2022 and 42% in 2021.
As a result, any decrease in demand for intermodal transportation services could have a material adverse effect on our results of operations. Our 10 largest customers accounted for approximately 44% of our total revenue in 2024, 42% in 2023 and 43% in 2022.
We expect to continue expanding our service offerings. In the event we implement new service offerings, we may devote substantial resources to educating our employees and customers on such offerings with no assurance that a sufficient number of customers will use such additional services.
In the event we implement new service offerings, we may devote substantial resources to educating our employees and customers on such offerings with no assurance that a sufficient number of customers will use such additional services.
In addition, insurance companies generally require us to collateralize our SIR or deductible levels. At December 31, 2023, we had insurance-related surety bonds totaling $46.9 million and letters of credit totaling $0.2 million. If these collateralization requirements increase, our borrowing capacity could be adversely affected.
In addition, insurance companies generally require us to collateralize our SIR or deductible levels. At December 31, 2024, we had insurance-related surety bonds totaling $46.9 million and letters of credit totaling $0.4 million. If these collateralization requirements increase, our borrowing capacity could be adversely affected.
Disruptions due to transitional challenges in upgrading or enhancing our technology systems; failures in the services upon which our information technology platforms rely, including those that may arise from adverse weather conditions or natural calamities, such as floods, hurricanes, earthquakes or tornadoes; illegal acts, including terrorist attacks; human error or systems modernization initiatives; or other disruptions, may adversely affect our business, which could increase our costs or result in a loss of customers that could have a material adverse effect on our results of operations and financial position. 11 Our information technology systems are subject to cyber and other risks some of which are beyond our control.
Disruptions due to transitional challenges in upgrading or enhancing our technology systems; failures in the services upon which our information technology platforms rely, including those that may arise from adverse weather conditions or natural calamities, such as floods, hurricanes, earthquakes or tornadoes; illegal acts, including terrorist attacks; human error or systems modernization initiatives; or other disruptions, may adversely affect our business, which could increase our costs or result in a loss of customers that could have a material adverse effect on our results of operations and financial position.
If we were found to be out of compliance, the DOT could levy fines and restrict or otherwise impact our operations. We may also become subject to new or more restrictive regulations relating to carbon emissions under climate change legislation or limits on vehicle weight and size.
If we were found to be out of compliance, the DOT could levy fines and restrict or otherwise impact our operations. We may also become subject to new or more restrictive regulations relating to carbon emissions under climate change legislation or limits on vehicle weight and size. EASO is also subject to transportation regulations in Mexico.
The United States government and foreign governments may take other actions that may impact the purchase and production of goods, including imposing tariffs or other regulations on certain goods shipped by our customers, that may increase costs for goods transported globally and reduce end-user demand for these products.
The United States government and foreign governments may take other actions that may impact the purchase and production of goods, including changes to certain trade agreements and imposing tariffs, quotas, or other regulations on certain goods shipped by our customers, that may increase costs for goods transported globally and reduce end-user demand for these products.
Our operating results could be adversely affected if any of the following were to occur: (i) the number or the severity of claims increases; (ii) we are required to accrue or pay additional amounts because claims prove to be more severe than our original assessment; or (iii) claims exceed our coverage amounts.
Our operating results could be adversely affected if any of the following were to occur: (i) the number or the severity of claims increases, including from increased cargo theft; (ii) we are required to accrue or pay additional amounts because claims prove to be more severe than our original assessment; or (iii) claims exceed our coverage amounts.
Item 1A. RISK FACTORS Business Environment and Competition Risks A significant portion of our revenue is derived from intermodal and transportation solutions and from our significant customers. We derived 59% of our revenue from our intermodal and transportation solutions in 2023, 62% in 2022 and 63% in 2021.
Item 1A. RISK FACTORS Business Environment and Competition Risks A significant portion of our revenue is derived from Intermodal and Transportation Solutions and from our significant customers. We derived 57% of our revenue from our Intermodal and Transportation Solutions in 2024, 59% in 2023 and 62% in 2022.
The nature of our business exposes us to a variety of litigation risks related to a number of issues, including without limitation, accidents involving our trucks and employees, alleged violations of federal and state labor and employment laws, securities laws, environmental liability, privacy and other matters.
The nature of our business exposes us to a variety of litigation risks related to a number of issues, including accidents involving our trucks and employees, federal and state labor, employment and immigration laws, securities laws, environmental liability, privacy and other matters.
The Company is also subject to certain federal and state environmental laws and regulations, including those of the U.S. Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”).
We are also subject to certain federal and state environmental laws and regulations, including those of the U.S. Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”).
Furthermore, the failure to successfully integrate an acquired business or assets, including implementing financial controls and measures or achieving cross-selling objectives, could significantly impact our financial results.
Furthermore, the failure to successfully integrate an acquired business, including implementing financial controls and measures, successfully managing any minority shareholders or achieving cross-selling objectives, could significantly impact our financial results.
We cannot predict the impact this proposed rule, or potential future rulemaking at the state level, might have on the recruiting and retention of management and other employees (or our ability to enforce post-termination restrictive covenants).
We cannot predict the impact of potential future rulemaking at the federal or state level on the recruiting and retention of management and other employees (or our ability to enforce post-termination restrictive covenants).
Extreme or unusual weather conditions can disrupt our operations, impact freight volumes, and increase our costs, all of which could have a material adverse effect on our business results.
Rapid increases in fuel costs could also have a material adverse effect on our operations or future profitability. Extreme or unusual weather conditions can disrupt our operations, impact freight volumes, and increase our costs, all of which could have a material adverse effect on our business results.
With the increase in the use of social media outlets such as Facebook, YouTube, TikTok, Instagram, LinkedIn and X (formerly Twitter), adverse publicity can be disseminated quickly and broadly, making it increasingly difficult for us to effectively respond. This unfavorable publicity could also require us to allocate significant resources to rebuild our reputation.
With the increase in the use of social media outlets such as Facebook, YouTube, TikTok, Instagram, LinkedIn and X (formerly Twitter), adverse publicity can be disseminated quickly and broadly, making it increasingly difficult for us to effectively respond.
Costs we incur to defend or to satisfy a judgment or settlement of these claims may not be covered by insurance or could exceed the amount of that coverage or increase our insurance costs and could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Costs we incur to defend or to satisfy a judgment or settlement of these claims may not be covered by insurance or could exceed the amount of that coverage or increase our insurance costs and could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. 15 Our business may be affected by uncertainty or changes in United States or global social, political or regulatory conditions.
If we cannot secure sufficient transportation equipment and warehouse services at a reasonable price from third parties to meet our customers’ needs, our customers may seek to have their transportation and warehousing needs met by other providers with their own assets. This could have a material adverse effect on our business, results of operations and financial position.
If we cannot secure sufficient transportation equipment and warehouse services at a reasonable price from third parties to meet our customers’ needs, our customers may seek to have their transportation and warehousing needs met by other providers with their own assets.
Additionally, the State of California recently passed legislation and the SEC has proposed regulations regarding the disclosure of Scope 1, 2 and 3 GHG emissions.
Additionally, the State of California previously passed legislation regarding the disclosure of Scope 1, 2 and 3 GHG emissions.
Our continued efforts to obtain, enforce, protect and defend our intellectual property against a third-party infringement claim may be ineffective and could result in substantial costs which could adversely impact our corporate reputation, business, results of operations, and financial conditions. 16 Damage to our reputation through unfavorable publicity or the actions of our employees, certain suppliers or independent contractors could adversely affect our financial condition.
Our continued efforts to obtain, enforce, protect and defend our intellectual property against a third-party infringement claim may be ineffective and could result in substantial costs which could adversely impact our corporate reputation, business, results of operations, and financial conditions.
The market value of our Class A Common Stock may fluctuate and could be substantially adversely affected by various factors. We expect that the market price of our Class A Common Stock will continue to fluctuate due to a variety of factors, many of which are beyond our control.
We expect that the market price of our Class A Common Stock will continue to fluctuate due to a variety of factors, many of which are beyond our control.
Our information systems, including our accounting, communications and data processing systems, are integral to the efficient operation of our business. It is critical that the data processed by these systems remain secure, as it often includes competitive customer information, confidential transaction data, employee records and key financial and operational results and statistics.
It is critical that the data processed by these systems remain secure, as it often includes competitive customer information, confidential transaction data, employee records and key financial and operational results and statistics.
Because we depend on railroads for our operations, our operating results and financial condition are likely to be adversely affected by any increase in rates, reduction or deterioration in rail service or change in the railroads’ reliance on us to market their intermodal transportation services. We depend on major railroads in North America for the intermodal services we provide.
While we continue to focus our efforts on diversifying our customer base, we may not be successful in doing so. 7 Because we depend on railroads for our operations, our operating results and financial condition are likely to be adversely affected by any increase in rates, reduction or deterioration in rail service or change in the railroads’ reliance on us to market their intermodal transportation services.
We have minimal control over the operation, quality, or maintenance of these services or whether vendors will improve their services or continue to provide services that are essential to our business.
The services and service providers have all experienced significant system failures and outages at some point in the past. We have minimal control over the operation, quality, or maintenance of these services or whether vendors will improve their services or continue to provide services that are essential to our business.
In such instances, we will be highly dependent on existing managers and employees to manage those businesses, and the loss of any key managers or employees of the acquired business could have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.
In such instances, we will be highly dependent on existing managers and employees to manage those businesses, and the loss of any key managers or employees of the acquired business could have a material adverse effect on our financial condition, results of operations, cash flows and liquidity. 13 Legal, Regulatory and Compliance Risks We use a significant number of contingent workers, including independent contractors, such as owner operators, independent service providers, contract carriers and warehouse staff, in our businesses.
There is substantial competition for qualified personnel in the transportation and logistics services industry. The loss of any member of our management team, or other key persons, or the inability to hire key persons, could have an adverse effect on us.
The loss of any member of our management team, or other key persons, or the inability to hire key persons, could have an adverse effect on us.
Our inability to defend our intellectual property could damage our reputation and incur costs that have a negative impact on our operations or financial condition. The Company has registered various trademarks and designs in the United States, Mexico and Canada.
Our inability to defend our intellectual property could damage our reputation and incur costs that have a negative impact on our operations or financial condition. We have registered various trademarks and designs in the United States, Mexico and Canada. These marks play a major role in our business as they strengthen our brand recognition while helping accomplish our marketing strategy.
We accrue a contingent liability based upon examination of historical trends, historical actuarial analysis, our claims experience, total plan enrollment (including employee contributions), population demographics, and other various estimates.
We accrue a contingent liability based upon examination of historical trends, historical actuarial analysis, our claims experience, total plan enrollment (including employee contributions), population demographics, and other various estimates. Self-insurance reserves, net income, and cash flows could be materially affected if future claims differ significantly from our historical trends and assumptions.
In many regions, rail service is provided by one or a limited number of railroads. We primarily rely on contractual relationships with two railroads to support our intermodal business. Consequently, a reduction in, or elimination of, rail service to a particular market is likely to materially adversely affect our ability to provide intermodal transportation services to some of our customers.
We depend on major railroads in North America for the intermodal services we provide. In many regions, rail service is provided by one or a limited number of railroads. We primarily rely on contractual relationships with two railroads to support our intermodal business.
Our business may be affected by uncertainty or changes in United States or global social, political or regulatory conditions. We arrange for the movement of freight, a portion of which originates from other countries, including China, into and out of the United States, Mexico and Canada, and we import 53-foot intermodal containers manufactured in China.
We arrange for the movement of freight, a portion of which originates from other countries, including China, into and out of the United States, Mexico and Canada, and we import 53-foot intermodal containers manufactured in China. Adverse developments in laws, policies or practices in the United States and internationally can negatively impact our business and the business of our customers.
If we fail to successfully implement critical technology, if our technology does not provide the anticipated benefits or it does not meet market demands, we may be placed at a competitive disadvantage and could lose customers, materially adversely impacting our financial condition and results of operations.
If we fail to successfully implement critical technology, if our technology does not provide the anticipated benefits or it does not meet market demands, we may be placed at a competitive disadvantage and could lose customers, materially adversely impacting our financial condition and results of operations. 11 Our information technology systems also depend upon the internet, third-party service providers, global communications providers, satellite-based communications systems, the electric utilities grid, electric utility providers and telecommunications providers as well as their respective vendors.
Self-insurance reserves, net income, and cash flows could be materially affected if future claims differ significantly from our historical trends and assumptions. 10 We are partially self-insured for vehicle liability and workers’ compensation claims. Our self-insurance accruals are based on actuarially estimated, undiscounted cost of claims, which includes claims incurred but not reported.
We are partially self-insured for vehicle liability and workers’ compensation claims. Our self-insurance accruals are based on actuarially estimated, undiscounted cost of claims, which includes claims incurred but not reported.
Any significant work stoppage, slowdown or other disruption, including disruption due to restrictions imposed as a result of a pandemic, involving port employees, railroad employees, warehouse employees or truck drivers could adversely affect our business and results of operations. Currently, none of our employees are represented by a collective bargaining agreement.
Strikes, work slowdowns, or labor shortages among railroad employees in either the United States, Canada or Mexico would impact our operations. Any significant work stoppage, slowdown or other disruption, including disruption due to restrictions imposed as a result of a pandemic, involving port employees, railroad employees, warehouse employees or truck drivers could adversely affect our business and results of operations.
Our business could be adversely affected by strikes or work stoppages by truck drivers, warehouse employees, port employees and railroad employees, or the decision of our employees to unionize. There may be labor unrest, including strikes and work stoppages, among workers at various transportation providers and in industries affecting the transportation industry, such as warehousing and ports.
There may be labor unrest, including strikes and work stoppages, among workers at various transportation providers and in industries affecting the transportation industry, such as warehousing and ports.
A reduction in or termination of our services by one or more of our largest customers could have a material adverse effect on our revenue and business. While we continue to focus our efforts on diversifying our customer base, we may not be successful in doing so.
A reduction in or termination of our services by one or more of our largest customers could have a material adverse effect on our revenue and business.
These marks play a major role in our business as they strengthen our brand recognition while helping accomplish our marketing strategy. Some of our intellectual property rights related to trademarks, trade secrets, domain names, copyrights, or other intellectual property could be challenged or invalidated or misappropriated or infringed upon, by third parties.
Some of our intellectual property rights related to trademarks, trade secrets, domain names, copyrights, or other intellectual property could be challenged or invalidated or misappropriated or infringed upon, by third parties.
Our Class A Common Stock price may fluctuate significantly in the future, and these fluctuations may be unrelated to our performance.
Our Class A Common Stock price may fluctuate significantly in the future, and these fluctuations may be related to our performance. We also cannot predict the effect our dual-class structure may have on the market prices of our Class A Common Stock.
Rate increases to our customers may reduce the attractiveness of intermodal transportation compared to truck or other transportation modes, which could cause a decrease in demand 7 for our services. Further, our ability to continue to expand our intermodal transportation business is dependent upon the railroads’ ability to increase capacity for intermodal freight and provide consistent and reliable service.
Consequently, a reduction in, or elimination of, rail service to a particular market is likely to materially adversely affect our ability to provide intermodal transportation services to some of our customers. Rate increases to our customers may reduce the attractiveness of intermodal transportation compared to truck or other transportation modes, which could cause a decrease in demand for our services.
Our residential final mile delivery service exposes us to risks associated with our and our vendors’ trucks and drivers delivering to residential customers.
This could have a material adverse effect on our business, results of operations and financial position. 12 Our residential final mile delivery service exposes us to risks associated with our and our vendors’ trucks and drivers delivering to residential customers.
If we or any of these vendors do not reliably and safely perform their obligations, we and our vendors could be exposed to liability or reputational harm. 12 The ability to hire or retain management and other employees is critical to our continued success, and the loss of or inability to hire such personnel could have a material adverse effect on our business, financial condition and results of operations.
The ability to hire or retain management and other employees is critical to our continued success, and the loss of or inability to hire such personnel could have a material adverse effect on our business, financial condition and results of operations. There is substantial competition for qualified personnel in the transportation and logistics services industry.
Additionally, changes to current United States international trade agreements may lead to fewer goods transported and we may need to restructure certain terms of business with suppliers or customers. General Risks Our failure to implement or market new and existing services to existing and potential customers could have an adverse effect on our operations.
Additionally, changes to current United States international trade agreements may lead to fewer goods transported and we may need to restructure certain terms of business with suppliers or customers. 16 We are subject to certain risks arising from doing business in Mexico.
If in the future our employees decide to unionize, this would increase our operating costs and force us to alter the way we operate causing an adverse effect on our operating results. 9 Relatively small increases in our transportation and warehouse costs, including fuel, that we are unable to pass through to our customers are likely to have a significant adverse effect on our operating income.
Currently, none of our employees are represented by a collective bargaining agreement in the United States. If in the future our employees decide to unionize, this would increase our operating costs and force us to alter the way we operate causing an adverse effect on our operating results.
A security breach, failure or disruption of these services could have a material adverse effect on our business, results of operations and financial position. We rely heavily on the proper functioning and availability of our information systems for our operations as well as for providing value-added services to our customers.
Our information technology systems are subject to cyber and other risks, some of which are beyond our control. A security breach, failure or disruption of these services could have a material adverse effect on our business, results of operations and financial position.
We also rely on the timely and free flow of goods through open and operational international shipping lanes and ports. Disruptions of these shipping lanes, such as the drought impacting the Panama Canal and ongoing geopolitical conditions, including terrorist acts, impacting the Suez Canal, could create significant risks for our business or provide opportunities with changes to shipping patterns.
Disruptions of these shipping lanes, such as ongoing geopolitical issues impacting the Panama Canal and the Suez Canal, could create significant risks for our business or provide opportunities with changes to shipping patterns. 9 Our business could be adversely affected by strikes or work stoppages by truck drivers, warehouse employees, port employees and railroad employees, or the decision of our employees to unionize.
Our success depends on our ability to consistently deliver operational excellence and strong customer service.
Damage to our reputation through unfavorable publicity or the actions of our employees, certain suppliers or independent contractors could adversely affect our financial condition. Our success depends on our ability to consistently deliver operational excellence and strong customer service.
Purchased transportation and warehousing costs represented 75% of our consolidated revenue in 2023, 76% in 2022 and 75% in 2021.
Relatively small increases in our transportation and warehouse costs, including fuel, that we are unable to pass through to our customers are likely to have a significant adverse effect on our operating income. Purchased transportation and warehousing costs represented 74% of our consolidated revenue in 2024, 75% in 2023 and 76% in 2022.
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Strikes, work slowdowns, or labor shortages among railroad employees in the United States, Canada or anywhere else that our customers’ freight travels by railroad would impact our operations.
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Further, our ability to continue to expand our intermodal transportation business is dependent upon the railroads’ ability to increase capacity for intermodal freight and provide consistent and reliable service.
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Rapid increases in fuel costs could also have a material adverse effect on our operations or future profitability.
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Our customers’ and suppliers’ businesses may be negatively affected by various economic and other factors such as recessions, downturns in the economy, global uncertainty and instability, the effects of pandemics, the effects of climate change, changes in United States social, political, and regulatory conditions or a disruption of financial markets, which may decrease demand for our services or increase our costs.
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Additionally, proposed and potential new legislation intended to encourage the adoption of alternative fuel technologies, including electric vehicles (“EVs”), as well as potential customer demand driven by similar legislation and market-driven expectations, could accelerate or expand our plans for a transition to EVs.
Added
We also rely on the timely and free flow of goods through open and operational international shipping lanes and ports.
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The Company has piloted the use of EVs but has no immediate plans for a broad transition to EVs.
Added
We rely heavily on the proper functioning and availability of our information systems for our operations as well as for providing value-added services to our customers. Our information systems, including our accounting, communications and data processing systems, are integral to the efficient operation of our business.
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The Company’s broader usage of EVs will depend on several factors including availability of EVs, access to charging infrastructure, consistent availability of electrical supply, and availability of tax or other incentives to mitigate the required capital expenditures for EV fleet purchases, charging, maintenance, replenishment and expansion.
Added
If we or any of these vendors do not reliably and safely perform their obligations, we and our vendors could be exposed to liability or reputational harm.
Removed
If legislative or market forces require the accelerated deployment of EVs before other cost and operational factors are adequately addressed, then such transition could have a material adverse effect on our operations and future profitability.
Added
We have growing operations in Mexico through our 51% ownership in EASO, which subjects us to general international business risks, including: • foreign currency fluctuation; • changes in Mexico's economic strength; • disruptions related to port of entry restrictions; • difficulties in enforcing contractual obligations and intellectual property rights; • burdens of complying with a wide variety of international and US export, import, business procurement, transparency, and corruption laws, including the US Foreign Corrupt Practices Act; • changes in trade agreements and US-Mexico relations; • uncertainty regarding and changes in tariffs, trade restrictions and taxes; • security risks, including theft or vandalism of our revenue equipment and our customers' cargo; and • social, political, and economic instability.
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Our information technology systems also depend upon the internet, third-party service providers, global communications providers, satellite-based communications systems, the electric utilities grid, electric utility providers and telecommunications providers as well as their respective vendors. The services and service providers have all experienced significant system failures and outages at some point in the past.
Added
General Risks Our failure to implement or market new and existing services to existing and potential customers could have an adverse effect on our operations. We expect to continue expanding our service offerings.
Removed
A proposed rulemaking by the Federal Trade Commission (“FTC”), if it is made effective and withstands effective legal challenges, would prevent the use of non-competition agreements in most circumstances in the future.
Added
This unfavorable publicity could also require us to allocate significant resources to rebuild our reputation. 17 The market value of our Class A Common Stock may fluctuate and could be substantially adversely affected by various factors.
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Legal, Regulatory and Compliance Risks We use a significant number of contingent workers, including independent contractors, such as owner operators, independent service providers, contract carriers and warehouse staff, in our businesses.
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Changes in immigration laws could increase the costs of doing business or otherwise disrupt our operations. We have hired individuals, including Information Technology (“IT”) employees, from outside the United States. We have employee drivers and owner-operator drivers who are immigrants to the United States.
Removed
We engage third-party consultants, including for various IT projects, who may utilize personnel from outside the United States. If immigration laws are changed or if new more restrictive government regulations are enacted or increased, our access to qualified and skilled personnel may be limited, the costs of doing business may increase and our operations may be disrupted.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES As of December 31, 2023, we directly, or indirectly through our subsidiaries, operated 91 offices, terminals and warehouses throughout the United States, Canada and Mexico, including our headquarters in Oak Brook, Illinois. All of our facilities are leased except for our headquarters.
Biggest changeItem 2. PROPERTIES As of December 31, 2024, we directly, or indirectly through our subsidiaries, operated 101 offices, terminals and warehouses throughout the United States, Canada and Mexico, including our headquarters in Oak Brook, Illinois. All of our facilities are leased except for our headquarters.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS The Company is a party to litigation in the ordinary course of our business, including at various times, claims for personal injury or property damage, bankruptcy preference claims, employment-related claims, including putative class actions, commercial and intellectual property disputes, and claims regarding freight lost or damaged in transit, improperly shipped or improperly billed.
Biggest changeItem 3. LEGAL PROCEEDINGS We are a party to litigation in the ordinary course of our business, including at various times, claims for personal injury or property damage, bankruptcy preference claims, employment-related claims, including putative class actions, commercial and intellectual property disputes, and claims regarding freight lost or damaged in transit, improperly shipped or improperly billed.
Some of the lawsuits to which we are a party are covered by insurance. For a further discussion of litigation involving the Company, see Note 15 to the consolidated financial statements under “Legal Matters,” which discussion and note are incorporated herein by reference.
Some of the lawsuits to which we are a party are covered by insurance. For a further discussion of litigation involving us, see Note 15 to the consolidated financial statements under “Legal Matters,” which discussion and note are incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe table below includes information on a monthly basis regarding the number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of restricted stock during the fourth quarter of 2023. These shares do not reduce the repurchase authority under the 2023 Program.
Biggest changeWe purchased 39,364 shares of Class A Common Stock for $1.7 million related to employee withholding upon vesting of restricted stock in the fourth quarter of 2024 and 56,564 shares for $2.1 million in the fourth quarter of 2023. 19 The table below includes information on a monthly basis regarding the number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of restricted stock during the fourth quarter of 2024.
These comparisons assume the investment of $100 on December 31, 2018 in each index and in the Company’s Class A Common Stock and the reinvestment of dividends.
These comparisons assume the investment of $100 on December 31, 2019 in each index and in our Class A Common Stock and the reinvestment of dividends.
On February 16, 2024, there were 10 holders of record of our Class B Common Stock. 18 Issuer Purchases of Equity Securities On January 4, 2024, the Company announced a two-for-one stock split of the Company’s Class A and Class B common stock. Refer to the Note 1 to the consolidated financial statements for the effect of this stock split.
Issuer Purchases of Equity Securities On January 4, 2024, we announced a two-for-one stock split of our Class A and Class B common stock. Refer to the Note 1 to the consolidated financial statements for the effect of this stock split.
On February 16, 2024, there were approximately 379 stockholders of record of the Class A Common Stock and in addition, there were an estimated 33,067 beneficial owners of the Class A Common Stock whose shares were held by brokers and other fiduciary institutions.
On February 18, 2025, there were approximately 398 stockholders of record of the Class A Common Stock and in addition, there were an estimated 45,944 beneficial owners of the Class A Common Stock whose shares were held by brokers and other fiduciary institutions. On February 18, 2025, there were 10 holders of record of our Class B Common Stock.
Under the 2022 Program, the shares may be repurchased in the open market or in privately negotiated transactions, from time to time subject to market and other conditions. The approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares and the program may be modified, suspended or discontinued at any time.
The approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares and the program may be modified, suspended or discontinued at any time.
Accordingly, there can be no assurance that the Board will declare or pay cash dividends on the shares of Common Stock in the future. Our certificate of incorporation requires that any cash dividends must be paid equally on each outstanding share of Class A Common Stock and Class B Common Stock.
Our certificate of incorporation requires that any cash dividends must be paid equally on each outstanding share of Class A Common Stock and Class B Common Stock.
Our credit facility prohibits us from paying dividends on the Common Stock if there has been, or immediately following the payment of a dividend there would be, a default or an event of default under the credit facility.
Our credit facility prohibits us from paying dividends on the Common Stock if there has been, or immediately following the payment of a dividend there would be, a default or an event of default under the credit facility. 20 Performance Graph The following line graph compares our cumulative total stockholder return on our Class A Common Stock since December 31, 2019 with the cumulative total return of the Nasdaq Stock Market Index (NQUSBT) and the Nasdaq Transportation Index (NQUSB27707).
In October 2023, the Board authorized the purchase of up to $250 million of our Class A Common Stock pursuant to a share repurchase program (the “ 2023 Program ” ), which replaces the 2022 Program.
In October 2023, the Board authorized the purchase of up to $250 million of our Class A Common Stock pursuant to a share repurchase program (the “ 2023 Program ” ). Under the 2023 Program, the shares may be repurchased in the open market or in privately negotiated transactions, from time to time subject to market and other conditions.
Maximum Value of Total Total Number of Shares that May Yet Number of Average Shares Purchased Be Purchased Under Shares Price Paid as Part of the the 2023 Program Purchased Per Share 2023 Program (in 000’s) 10/1/2023 - 10/31/2023 36,568 $ 37.64 - $ 250,000 11/1/2023 - 11/30/2023 476,538 $ 36.76 469,826 $ 232,715 12/1/2023 - 12/31/2023 242,916 $ 39.77 229,632 $ 223,589 Total 756,022 $ 37.77 699,458 $ 223,589 Quarterly Cash Dividend On February 22, 2024, the Board declared a quarterly cash dividend of $0.125 per share on the Company’s Class A and Class B common stock.
Maximum Value of Total Total Number of Shares that May Yet Number of Average Shares Purchased as Be Purchased Under Shares Price Paid Part of Publicly the Plan Purchased Per Share Announced Plan (in 000’s) 10/1/2024 - 10/31/2024 35,419 $ 43.04 - $ 155,348 11/1/2024 - 11/30/2024 3,209 $ 48.37 - $ 155,348 12/1/2024 - 12/31/2024 736 $ 51.64 - $ 155,348 Total 39,364 $ 43.64 - $ 155,348 Quarterly Cash Dividend The Board declared quarterly cash dividends throughout 2024 as follows: • On February 22, 2024, the Board declared a quarterly cash dividend of $0.125 per share on our Class A and Class B Common Stock.
The dividend is scheduled to be paid on March 27, 2024 to stockholders of record as of March 8, 2024. The declaration and payment of quarterly cash dividends are subject to the approval of the Board at its sole discretion and compliance with applicable laws and regulations.
The declarations and payments of the quarterly cash dividends were subject to the approval of the Board at its sole discretion and in compliance with applicable laws and regulations. Accordingly, there can be no assurance that the Board will declare or pay cash dividends on the shares of Common Stock in the future.
Removed
In October 2022, our Board of Directors (the “Board”) authorized the purchase of up to $200 million of our Class A Common Stock pursuant to a share repurchase program (the “ 2022 Program ” ).
Added
These shares do not reduce the repurchase authority under the 2023 Program. We made no purchases under the 2023 Program in the fourth quarter of 2024. The table below also includes information on a monthly basis regarding the number of shares purchased under the 2023 Program.
Removed
The 2022 Program was terminated in October 2023 in conjunction with the authorization of the 2023 Program (as defined below) and as a result, no shares were purchased under the 2022 Program in the fourth quarter of 2023.
Added
The dividend was paid on March 27, 2024 to stockholders of record as of March 8, 2024. • On May 23, 2024, the Board declared a quarterly cash dividend of $0.125 per share on our Class A and Class B Common Stock.
Removed
Under the 2023 Program, the shares may be repurchased in the open market or in privately negotiated transactions, from time to time subject to market and other conditions. The approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares and the program may be modified, suspended or discontinued at any time.
Added
The dividend was paid on June 26, 2024 to stockholders of record as of June 7, 2024. • On August 27, 2024, the Board declared a quarterly cash dividend of $0.125 per share on our Class A and Class B Common Stock.
Removed
We purchased 56,564 shares of Class A Common Stock for $2.1 million related to employee withholding upon vesting of restricted stock in the fourth quarter of 2023 and 67,830 shares for $2.5 million in the fourth quarter of 2022.
Added
The dividend was paid on September 25, 2024 to stockholders of record as of September 6, 2024. • On November 25, 2024, the Board declared a quarterly cash dividend of $0.125 per share on our Class A and Class B Common Stock. The dividend was paid on December 20, 2024 to stockholders of record as of December 6, 2024.
Removed
The table below also includes information on a monthly basis regarding the number of shares purchased under the 2023 Program. All share and per share amounts have been revised to give effect to the two-for-one stock split that was announced by the Company on January 4, 2024.
Removed
We are currently in compliance with the covenants contained in the credit facility. 19 Performance Graph The following line graph compares the Company’s cumulative total stockholder return on its Class A Common Stock since December 31, 2018 with the cumulative total return of the Nasdaq Stock Market Index (NQUSBT) and the Nasdaq Transportation Index (NQUSB27707).

Item 7. Management's Discussion & Analysis

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

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Biggest changeThis decrease was primarily due to $78 million less of incremental expense related to the decreased average company driver count, partially offset by an $8 million increase in incentive compensation expense, a $4 million increase in office employee compensation due to higher headcount and increased expenses resulting from the acquisitions of TAGG and Choptank.
Biggest changeThis expense increase was due primarily to the FAFM acquisition on December 20, 2023 and the EASO transaction on October 23, 2024, as well as an increase in incentive compensation expense of $8 million, partially offset by decreases in driver related expenses of $15 million related to lower average driver headcount, lower office compensation expense of $7 million and lower restricted stock expense of $3 million.
Provision for Income Taxes The provision for income taxes decreased to $42 million in 2023 from $111 million in 2022 due a decrease in pre-tax income. We provided for income taxes using an effective rate of 19.9% in 2023 and an effective rate of 23.7% in 2022.
Provision for Income Taxes The provision for income taxes decreased to $42 million in 2023 from $111 million in 2022 due to a decrease in pre-tax income. We provided for income taxes using an effective rate of 19.9% in 2023 and an effective rate of 23.7% in 2022.
RESULTS OF OPERATIONS Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table summarizes our operating revenue by segment (in thousands): Years Ended Operating Revenue December 31, 2023 2022 Intermodal and Transportation Solutions $ 2,495,663 $ 3,312,431 Logistics 1,820,856 2,121,818 Inter-segment eliminations (113,934 ) (93,759 ) Total operating revenue $ 4,202,585 $ 5,340,490 The following table summarizes our operating income by segment (in thousands): Years Ended Operating Income December 31, 2023 2022 Intermodal and Transportation Solutions $ 107,117 $ 348,537 Logistics 105,114 126,184 Total operating income $ 212,231 $ 474,721 Total consolidated operating revenue decreased 21% to $4.2 billion in 2023 from $5.3 billion in 2022.
RESULTS OF OPERATIONS Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table summarizes our operating revenue by segment (in thousands): Years Ended Operating Revenue December 31, 2023 2022 Intermodal and Transportation Solutions $ 2,495,663 $ 3,312,431 Logistics 1,820,856 2,121,818 Inter-segment eliminations (113,934 ) (93,759 ) Total operating revenue $ 4,202,585 $ 5,340,490 The following table summarizes our operating income by segment (in thousands): Years Ended Operating Income December 31, 2023 2022 Intermodal and Transportation Solutions $ 107,117 $ 348,537 Logistics 105,114 126,184 Total operating income $ 212,231 $ 474,721 25 Total consolidated operating revenue decreased 21% to $4.2 billion in 2023 from $5.3 billion in 2022.
We have umbrella policies to limit our exposure above these SIR limits and deductibles. Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal and regulatory factors.
We have umbrella policies to limit our exposure above these SIR limits and deductibles. 30 Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal and regulatory factors.
Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation services and final mile delivery.
Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, cross-docking, consolidation and fulfillment services and final mile delivery.
The increase in headcount was due primarily to the acquisition of FAFM partially offset by decreases in both office employees and company drivers. Depreciation and Amortization Depreciation and amortization expense increased to $144 million in 2023 from $132 million in 2022.
The increase in headcount was due primarily to the acquisition of FAFM partially offset by decreases in both office employees and company drivers. 26 Depreciation and Amortization Depreciation and amortization expense increased to $144 million in 2023 from $132 million in 2022.
Our Intermodal and Transportation Solutions segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking.
Intermodal and Transportation Solutions. Our ITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking.
These expenses, as a percentage of revenue, increased to 1.2% in 2023 from 1.1% in 2022. 23 General and Administrative General and administrative expenses decreased to $106 million in 2023 from $121 million in 2022. These expenses, as a percentage of revenue, increased to 2.5% in 2023 from 2.2% in 2022.
These expenses, as a percentage of revenue, increased to 1.2% in 2023 from 1.1% in 2022. General and Administrative General and administrative expenses decreased to $106 million in 2023 from $121 million in 2022. These expenses, as a percentage of revenue, increased to 2.5% in 2023 from 2.2% in 2022.
We also contract for services with approximately 460 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs.
We also contract for services with approximately 500 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs.
Our business operates or has access to approximately 11 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations.
Our business operates or has access to approximately 7 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations.
This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In 2023, approximately 78% of our drayage services was provided by our own fleet.
This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In 2024, approximately 73% of our drayage services was provided by our own fleet.
See Note 10 of the consolidated financial statements for details related to interest rates and commitment fees. We have standby letters of credit that expire in 2024. As of December 31, 2023 and December 31, 2022, our letters of credit were $1 million and $43 million, respectively.
See Note 10 of the consolidated financial statements for details related to interest rates and commitment fees. We have standby letters of credit that expire in 2025. Our letters of credit were $1 million as of both December 31, 2024 and December 31, 2023, respectively.
Hub’s top 50 customers represent approximately 64% of revenue for fiscal 2023 while one customer accounted for more than 10% of our annual revenue in 2023 in both segments. We use various performance indicators to manage our business. We closely monitor profit levels for our top customers.
Hub’s top 50 customers represent approximately 68% of revenue for fiscal 2024 while one customer accounted for more than 10% of our annual revenue in 2024 in both segments. We use various performance indicators to manage our business. We closely monitor profit levels for our customers.
Other services include full outsource logistics solutions, transportation management services, freight consolidation, warehousing and fulfillment, and final mile delivery services. We service a large and diversified customer base in a broad range of industries, including retail, consumer products and durable goods.
Other services include full outsource logistics solutions, transportation management services, consolidation and fulfillment services, final mile delivery, parcel and international services. We service a large and diversified customer base in a broad range of industries, including retail, consumer products and durable goods.
Vendor cost changes and vendor service levels are also monitored closely. 21 Uncertainties and risks to our outlook include inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, rising inflation, increases in interest rates, an economic recession and geopolitical concerns), a shift by consumers to spending on services at the expense of goods, an increase of retailers’ inventory levels, the ability of customers to pay our accounts receivable, a significant increase in transportation supply in the marketplace, aggressive pricing actions by our competitors and any inability to pass cost increases, such as transportation and warehouse costs, through to our customers, all of which could have a materially negative impact on our revenue, profitability and cash flow in 2024.
Vendor cost changes and vendor service levels are also monitored closely. 22 Uncertainties and risks to our outlook include inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, rising inflation, tariffs, increases in interest rates, an economic recession and geopolitical concerns), a shift by consumers to spending on services at the expense of goods, an increase of retailers’ inventory levels, the ability of customers to pay our accounts receivable, a significant increase in transportation supply in the marketplace, aggressive pricing actions by our competitors and any inability to pass cost increases, such as transportation and warehouse costs, through to our customers, economic factors such as the impact of potentially increasing tariffs between trading partners, all of which could have a materially negative impact on our revenue, profitability and cash flow in 2025.
Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of December 31, 2023, our trucking transportation operation consisted of approximately 2,300 tractors, 2,900 employee drivers and 4,300 trailers.
Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of December 31, 2024, our trucking transportation operation consisted of approximately 2,300 tractors, 3,200 employee drivers and 4,700 trailers.
ITS operating income decreased to $107 million, 4% of revenue, as compared to $349 million, 11% of revenue in the prior year due to lower volume, lower customer rates, and lower surcharges and accessorial income.
ITS operating income decreased to $107 million, 4.3% of revenue, as compared to $349 million, 10.5% of revenue in the prior year due to lower volume, lower customer rates, and lower surcharges and accessorial income.
Service requirements may include, for example, on-time delivery, handling freight loss and damage claims, setting appointments for pick-up and delivery and tracing shipments in transit. We have discretion in setting prices for our services and as a result, the amount we earn varies.
Our customers view us as responsible for fulfillment including the acceptability of the service. Service requirements may include, for example, on-time delivery, handling freight loss and damage claims, setting appointments for pick-up and delivery and tracing shipments in transit. We have discretion in setting prices for our services and as a result, the amount we earn varies.
Based on the present value of the lease payments, the estimated right-of-use (“ROU”) assets and lease liabilities related to these contracts will total approximately $7.1 million and $0.3 million for operating and finance leases, respectively. 27 Deferred Compensation Under our Non-qualified Deferred Compensation Plan (the “Plan”), participants can elect to defer certain compensation.
Based on the present value of the lease payments, the estimated right-of-use (“ROU”) assets and lease liabilities related to these contracts will total approximately $2.7 million. Deferred Compensation Under our Non-qualified Deferred Compensation Plan (the “Plan”), participants can elect to defer certain compensation.
This difference is a result of favorable book to tax differences, primarily those related to compensation, which caused 2023 taxable income to be less than 2023 financial statement income before taxes. We expect cash payments in 2024 for taxes to be greater than book tax expense.
This difference is a result of unfavorable book to tax differences, primarily those related to depreciation, which caused 2024 taxable income to be more than 2024 financial statement income before taxes. We expect our cash payments for income taxes in 2025 to exceed our income tax expense.
Net cash used in investing activities for the year ended December 31, 2023 was $373 million which included cash used in acquisitions of $261 million and capital expenditures of $140 million, partially offset by proceeds from the sale of equipment of $28 million.
Net cash used in investing activities for the year ended December 31, 2024 was $53 million which included capital expenditures of $51 million and net cash used in acquisitions of $14 million, partially offset by proceeds from the sale of equipment of $12 million.
CONTRACTUAL OBLIGATIONS Aggregated information about our obligations and commitments to make future contractual payments such as debt and lease obligations as of December 31, 2023 is presented in the following table (in thousands).
We were in compliance with the financial covenants in our credit agreements as of December 31, 2024 and December 31, 2023. 28 CONTRACTUAL OBLIGATIONS Aggregated information about our obligations and commitments to make future contractual payments such as debt and lease obligations as of December 31, 2024 is presented in the following table (in thousands).
LIQUIDITY AND CAPITAL RESOURCES Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment.
The lower effective tax rate in 2023 resulted primarily from a change in state apportionment methodology. LIQUIDITY AND CAPITAL RESOURCES Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment.
Payments under the Plan are due as follows (in thousands): Future Payments Due: Year 1 $ 535 Year 2 2,930 Year 3 1,552 Year 4 1,177 Year 5 1,216 Thereafter 13,075 $ 20,485 The above future payments are fully funded by our restricted investments comprised of mutual funds and other security instruments as noted in Note 14.
Payments under the Plan are due as follows (in thousands): Year 1 $ 3,771 Year 2 1,930 Year 3 1,366 Year 4 1,372 Year 5 1,125 Thereafter 11,826 $ 21,390 The above future payments are fully funded by our restricted investments comprised of mutual funds and other security instruments as noted in Note 14.
The $96 million increase in cash used in financing activities for 2023 versus 2022 was primarily due to an increase in the purchase of treasury stock of $34 million, an increase in cash paid for stock related to employee withholding taxes of $2 million and a decrease in proceeds from the issuance of debt of $65 million, partially offset by a decrease in the repayments of long-term debt of $5 million.
The $53 million increase in cash used in financing activities for 2024 versus 2023 was primarily due to an increase in dividends paid of $30 million, increases in repayments of long-term debt, distributions to non-controlling interests and cash paid for stock related to employee withholding taxes of $1 million each and a decrease in proceeds from the issuance of debt of $96 million, partially offset by a decrease in the purchase of treasury stock of $75 million.
Cash provided by operating activities for the year ended December 31, 2023 was approximately $422 million, which resulted primarily from non-cash charges of $210 million, income of $168 million and changes in operating assets and liabilities of $44 million. Cash provided by operating activities totaled $422 million in 2023 compared to $458 million in 2022.
Cash provided by operating activities for the year ended December 31, 2024 was approximately $194 million, which resulted from non-cash charges of $196 million and income of $104 million, partially offset by changes in operating assets and liabilities of $106 million. 27 Cash provided by operating activities totaled $194 million in 2024 compared to $422 million in 2023.
Revenue Recognition In accordance with the Accounting Standards Codification (ASC) topic 606, “Revenue from Contracts with Customers,” our significant accounting policy for revenue is as follows: Revenue is recognized when we transfer services to our customers in an amount that reflects the consideration we expect to receive.
These critical accounting policies are further discussed in Note 1 of the consolidated financial statements, which describes these and our other significant accounting policies. 29 Revenue Recognition In accordance with the Accounting Standards Codification (ASC) topic 606, “Revenue from Contracts with Customers,” our significant accounting policy for revenue is as follows: Revenue is recognized when we transfer services to our customers in an amount that reflects the consideration we expect to receive.
As of December 31, 2023 and December 31, 2022, we had no borrowings under our respective credit agreements and our unused and available borrowings were $349 million and $307 million, respectively. We were in compliance with the financial covenants in our credit agreements as of December 31, 2023 and December 31, 2022.
As of December 31, 2024 and December 31, 2023, we had no borrowings under our respective credit agreements. Our unused and available borrowings were $349 million as of both December 31, 2024 and December 31, 2023, respectively.
Exiting of truckload capacity, retail inventory levels declining leading to restocking demand, a return of typical shipping peak season demands and a stronger used tractor market could have a materially positive impact on our revenue, profitability and cash flows in 2024. Strategic Transactions On December 20, 2023, we acquired 100% of the equity interests of Forward Air Final Mile (“FAFM”).
Exiting of truckload capacity, retail inventory levels declining leading to restocking demand, a return of typical shipping peak season demands and a stronger used tractor market could have a materially positive impact on our revenue, profitability and cash flows in 2025.
We expect transportation equipment purchases to range from $40 million to $45 million, technology investments of approximately $20 million and warehouse equipment and other of approximately $10 million. We plan to fund these expenditures with a combination of cash and debt.
In 2025, we estimate capital expenditures will range from $50 million to $70 million. We expect transportation equipment purchases to range from $25 million to $45 million, technology investments of approximately $25 million as well as warehouse equipment and other expenditures. We plan to fund these expenditures with a combination of cash and debt.
These headwinds were partially offset by lower drayage costs as we increased the portion of drayage handled on our own fleet to 78% in 2023 as compared to 55% in the prior year, as well as an improvement in profitability at our dedicated trucking service line. 22 Logistics revenue decreased 14% to $1.8 billion primarily driven by lower revenue per load in our brokerage service line and lower managed transportation and final mile service line revenue, partially offset by an increase in fulfillment revenue.
These headwinds were partially offset by lower drayage costs as we increased the portion of drayage handled on our own fleet to 78% in 2023 as compared to 55% in the prior year, as well as an improvement in profitability at our dedicated trucking service line.
Brokerage volumes were flat compared to the prior year. Logistics operating income was 6% of revenue in both 2023 and 2022. Operating income was $105 million as compared to $126 million last year, as lower revenue was partially offset by lower purchased transportation costs and our yield management initiatives.
Operating income was $105 million as compared to $126 million last year, as lower revenue was partially offset by lower purchased transportation costs and our yield management initiatives.
These expenses, as a percentage of revenue, increased to 2.2% in 2022 from 2.1% in 2021.
These expenses, as a percentage of revenue, increased to 2.9% in 2024 from 2.5% in 2023.
We expect our newly declared dividend to be funded by cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed.
Cash used in financing activities including the purchase of treasury stock and dividend payments have been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed.
Net cash used in financing activities for the year ended December 31, 2023 was $148 million which includes cash used for the purchase of treasury stock of $144 million, repayments of long-term debt of $106 million, cash used for stock tendered for payments of withholding taxes of $10 million and finance lease payments of $2 million, partially offset by proceeds from the issuance of debt of $114 million.
Net cash used in financing activities for the year ended December 31, 2024 was $201 million which includes cash used for the repayments of long-term debt of $107 million, purchase of treasury stock of $68 million, dividends paid of $30 million, cash used for stock tendered for payments of withholding taxes of $11 million, finance lease payments of $2 million and a distribution to non-controlling interest holders of $1 million, partially offset by proceeds from the issuance of debt of $18 million.
These factors, discretion in setting prices and discretion in selecting vendors, further support reporting revenue on a gross basis for most of our revenue. 28 Allowance for Uncollectible Trade Accounts We extend credit to customers after a review of each customer’s credit profile and history.
In addition, we have the discretion to select our vendors from multiple suppliers for the services ordered by our customers. Due to these factors, we report revenue on a gross basis for most of our revenue. Allowance for Uncollectible Trade Accounts We extend credit to customers after a review of each customer’s credit profile and history.
The $36 million decrease in cash flow was primarily due to a decrease in net income of $189 million, partially offset by an increase in the change in assets and liabilities of $103 million and an increase in non-cash charges of $50 million.
The $228 million decrease in cash flow was primarily due to a decrease in the change in assets and liabilities of $150 million, a decrease in net income of $64 million and a decrease in non-cash charges of $14 million.
Total consideration for the transaction was approximately $261 million in cash. On August 22, 2022, we acquired 100% of the equity interests of TAGG. Total consideration for the transaction was approximately $103.4 million in cash. On October 19, 2021, we acquired 100% of the equity interests of Choptank.
On December 20, 2023, we acquired 100% of the equity interests of Forward Air Final Mile (“FAFM”). Total consideration for the transaction was approximately $257.2 million in cash. On August 22, 2022, we acquired 100% of the equity interests of TAGG. Total consideration for the transaction was approximately $103.4 million in cash.
We believe our strategy to offer multi-modal supply chain management solutions serves to strengthen and deepen our relationships with our customers and allows us to provide a more cost effective and higher service solution.
We believe our strategy to offer multi-modal supply chain management solutions serves to strengthen and deepen our relationships with our customers and allows us to provide a more cost effective and higher service solution. We concluded we have two reportable segments - Intermodal and Transportation Solutions (“ITS”), and Logistics, which are based primarily on the services each segment provides.
In 2023, cash paid for income taxes was $35 million, of which $23 million related to 2023 and $12 million related to 2022. The $23 million of cash paid for income taxes related to 2023 is less than the 2023 income tax expense of $41 million.
In 2024, cash paid for income taxes was $44 million, of which $34 million related to 2024 and $10 million related to 2023. The $34 million of cash paid for income taxes related to 2024 was more than the 2024 income tax expense of $29 million.
Debt incurred in 2023 was used to fund the purchase of transportation equipment.
Our debt balance decreased by $86 million during 2024. Debt incurred in 2024 was used to fund the purchase of transportation equipment.
Payments for our other investing activities, such as the construction of our office buildings and our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities including the purchase of treasury stock has been funded by cash from operations or cash on hand.
In prior years, we have funded our business acquisitions from cash on hand. Our investment agreement with EASO in October 2024 is consistent with this approach. Payments for our other investing activities, such as the construction of our office buildings and our capitalized technology investments, have been funded by cash on hand or cash flows from operations.
This increase was primarily due to higher claims expenses related to both auto liability and workers compensation claims in 2022 as well as higher premium costs. These expenses, as a percentage of revenue, remained consistent at 1.1% in both 2022 and 2021. General and Administrative General and administrative expenses increased to $121 million in 2022 from $90 million in 2021.
This expense decrease was primarily due to less claim expenses related to both auto liability and workers compensation claims in 2024. These expenses, as a percentage of revenue, decreased to 1.1% in 2024 from 1.2% in 2023. General and Administrative General and administrative expenses increased to $114 million in 2024 from $106 million in 2023.
Further, in most cases, we report our revenue on a gross basis because we are the primary obligor as we are responsible for providing the service desired by the customer. Our customers view us as responsible for fulfillment including the acceptability of the service.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Further, in most cases, we report our revenue on a gross basis because we are the primary obligor as we are responsible for providing the service desired by the customer.
As a percentage of revenue, salaries and benefits decreased to 10.2% in 2022 from 13.9% in 2021.
Salaries and Benefits Salaries and benefits increased to $577 million in 2024 from $553 million in 2023. As a percentage of revenue, salaries and benefits increased to 14.6% in 2024 from 13.2% in 2023.
As of December 31, 2023, we had $187 million of cash and cash equivalents and $21 million of restricted investments. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand.
As of December 31, 2024, we had $98 million of cash and cash equivalents. We also had $29 million of restricted cash and $22 million of restricted investments which are held for payments of long-term liabilities. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes.
This expense increase was partially offset by increased interest income of $1 million in 2022 due to higher interest rates on our cash balance and higher cash balances. Provision for Income Taxes Provision for income taxes increased to $111 million in 2022 from $59 million in 2021 due to significantly higher pre-tax income in 2022.
Interest expense increased to $14 million in 2024 from $13 million in 2023 driven by higher interest rates on our debt, partially offset by lower average debt balances. Provision for Income Taxes The provision for income taxes decreased to $29 million in 2024 from $42 million in 2023 due to a decrease in pre-tax income.
The following is a summary of operating results and certain items in the consolidated statements of income as a percentage of revenue (in thousands): Years Ended December 31, 2022 2021 Operating revenue $ 5,340,490 100.0% $ 4,232,383 100.0% Operating expenses: Purchased transportation and warehousing 4,036,503 75.6% 3,172,122 74.9% Salaries and benefits 543,010 10.2% 589,997 13.9% Depreciation and amortization 131,789 2.5% 116,473 2.8% Insurance and claims 58,064 1.1% 44,467 1.1% General and administrative 120,579 2.2% 90,040 2.1% Gain on sale of assets, net (24,176 ) -0.5% (19,173 ) -0.5% Total operating expenses 4,865,769 91.1% 3,993,926 94.3% Operating income $ 474,721 8.9% $ 238,457 5.7% CONSOLIDATED OPERATING EXPENSES Purchased Transportation and Warehousing Purchased transportation and warehousing costs increased 27% to $4.0 billion in 2022 from $3.2 billion in 2021.
The following is a summary of operating results and certain items in the consolidated statements of income as a percentage of revenue (in thousands): Years Ended December 31, 2024 2023 Operating revenue $ 3,946,390 100.0% $ 4,202,585 100.0% Operating expenses: Purchased transportation and warehousing 2,930,562 74.2% 3,145,595 74.8% Salaries and benefits 577,464 14.6% 553,326 13.2% Depreciation and amortization 141,469 3.6% 143,523 3.4% Insurance and claims 44,180 1.1% 49,040 1.2% General and administrative 113,698 2.9% 105,705 2.5% Gain on sale of assets, net (1,274 ) 0.0% (6,835 ) -0.2% Total operating expenses 3,806,099 96.4% 3,990,354 94.9% Operating income $ 140,291 3.6% $ 212,231 5.1% CONSOLIDATED OPERATING EXPENSES Purchased Transportation and Warehousing Purchased transportation and warehousing costs decreased 7% to $2.9 billion in 2024 from $3.1 billion in 2023.
These decreases were partially offset by more purchases of warehouse equipment of $12 million, tractors of $3 million and the remainder related to leasehold improvements in 2023. In 2024, we estimate capital expenditures will range from $55 million to $75 million.
The 2024 decrease was due to decreases in tractor purchases of $54 million, container purchases of $39 million, warehouse purchases of $3 million and the remainder related to leasehold improvements. These decreases were partially offset by increased technology investments of $5 million and increased purchases of other transportation equipment of $4 million.
Capital expenditures of $140 million related primarily to tractors of $71 million, containers of $41 million, technology investments of $14 million, warehouse equipment of $12 million and leasehold improvements of $3 million. Capital expenditures decreased by approximately $79 million in 2023 as compared to 2022.
Capital expenditures of $51 million related primarily to technology investments of $19 million, tractor purchases of $16 million, warehouse equipment of $9 million and the remainder for other transportation equipment. Capital expenditures decreased by approximately $89 million in 2024 as compared to 2023.
This expense increase was primarily due to the acquisitions of TAGG in August 2022 and Choptank, which incurred twelve months of expenses in 2022 as compared to just two months of expenses in 2021, as well as increases in legal expenses, higher use tax expense, the impairment write-off of leased assets and higher professional costs related to acquisitions and IT costs.
This expense increase was primarily due increased expenses from FAFM, which incurred twelve months of expenses in 2024 as compared to less than a month of expenses in 2023, increased expenses from EASO which was acquired in October 2024, as well as increases in rent expense, use tax expense, legal expense and IT service expense.
This expense, as a percentage of revenue, decreased to 2.5% in 2022 from 2.8% in 2021. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements. 25 Insurance and Claims Insurance and claims expense increased to $58 million in 2022 from $44 million in 2021.
These decreases were partially offset by an increase in amortization expense of intangibles related to the FAFM acquisition and the EASO transaction. This expense, as a percentage of revenue, increased to 3.6% in 2024 from 3.4% in 2023. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.
RESULTS OF OPERATIONS Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following table summarizes our operating revenue by segment (in thousands): Years Ended Operating Revenue December 31, 2022 2021 Intermodal and Transportation Solutions $ 3,312,431 $ 2,661,160 Logistics 2,121,818 1,643,849 Inter-segment eliminations (93,759 ) (72,626 ) Total operating revenue $ 5,340,490 $ 4,232,383 The following table summarizes our operating income by segment (in thousands): Years Ended Operating Income December 31, 2022 2021 Intermodal and Transportation Solutions $ 348,537 $ 169,105 Logistics 126,184 69,352 Total operating income $ 474,721 $ 238,457 Total consolidated operating revenue increased 26% to $5.3 billion in 2022 from $4.2 billion in 2021.
RESULTS OF OPERATIONS Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table summarizes our operating revenue by segment (in thousands): Years Ended Operating Revenue December 31, 2024 2023 Intermodal and Transportation Solutions $ 2,243,440 $ 2,495,663 Logistics 1,829,450 1,820,856 Inter-segment eliminations (126,500 ) (113,934 ) Total operating revenue $ 3,946,390 $ 4,202,585 The following table summarizes our operating income by segment (in thousands): Years Ended Operating Income December 31, 2024 2023 Intermodal and Transportation Solutions $ 56,952 $ 107,117 Logistics 83,339 105,114 Total operating income $ 140,291 $ 212,231 Total consolidated operating revenue decreased 6% to $3.9 billion in 2024 from $4.2 billion in 2023.
Gain on Sale of Assets, Net Net gains on the sale of equipment increased to $24 million in 2022 from $19 million in 2021. This increase resulted from both more units sold and a higher average gain per unit sold in 2022 as compared to 2021.
This decrease resulted from both less units sold and a lower average gain per unit sold in 2024 as compared to 2023. Other Income (Expense) Other expense, net increased to $8 million in 2024 from $3 million in 2023. The change was driven by decreased interest income in 2024 primarily due to lower average cash balances throughout the year.
Removed
Beginning in the first quarter of 2023, we concluded we have two reportable segments - Intermodal and Transportation Solutions, and Logistics, which are based primarily on the services each segment provides. Results for the years ended December 31, 2022 and 2021 have been recast to conform with current year presentation. Intermodal and Transportation Solutions.
Added
Strategic Transactions On October 23, 2024, we entered into an investment agreement with Corporación Interamericana de Logística, S.A. de C.V. and certain associated entities (commonly known as “EASO”), to acquire a controlling interest in EASO. The estimated fair value of total consideration transferred was approximately $55 million for a 51% equity stake in EASO.
Removed
Total consideration for the transaction was $127.6 million in cash and the settlement of accounts receivable due from Choptank of $0.3 million. In connection with the acquisition, we granted approximately $22 million of restricted stock to Choptank's senior management team, which is subject to certain vesting conditions.
Added
Intermodal and Transportation Solutions (“ITS”) revenue decreased 10% to $2.2 billion primarily due to a 15% decline in intermodal revenue per load (primarily due to lower prices, lower fuel surcharges, accessorial revenue and mix), partially offset by a 5% increase in intermodal volumes and a 1% growth in dedicated revenues due to customers onboarded in late 2023.
Removed
The lower effective tax rate in 2023 resulted primarily from a change in state apportionment methodology.
Added
ITS operating income decreased to $57 million, 2.5% of revenue, as compared to $107 million, 4.3% of revenue in the prior year due to lower customer rates in intermodal, lower accessorial income and more normalized bonus expense for employees.
Removed
Intermodal and Transportation Solutions (“ITS”) revenue increased 24% to $3.3 billion primarily due to a 32% increase in intermodal revenue per load (a combination of price, accessorial, fuel and mix) driven by favorable industry demand and supply conditions, and a 4% increase in dedicated revenues, offset by a 4% decrease in intermodal volume. 24 ITS operating income increased to $349 million, 11% of revenue, as compared to $169 million, 6% of revenue in the prior year due to higher customer rates, as well as accessorial and surcharge income, partially offset by lower intermodal volume, higher drayage costs, and increased repositioning costs.
Added
These headwinds were partially offset by lower drayage costs and lower equipment costs. 23 Logistics revenue remained consistent at $1.8 billion primarily driven by lower revenue per load in our brokerage service line, lower volumes in our brokerage business and lower revenue in our managed transportation and consolidation and fulfillment services.
Removed
Logistics revenue increased 29% to $2.1 billion primarily driven by the impact of a full year of revenue from Choptank (acquired in October 2021) and the partial year revenue contribution from TAGG (acquired in August 2022). We also experienced revenue growth at our Final Mile, Managed Transportation, Consolidation and legacy Brokerage businesses.
Added
This was partially offset by growth in our final mile business due to the FAFM acquisition in late 2023. Logistics operating income was 4.6% of revenue in 2024 compared to 5.8% in 2023. Lower revenue was partially offset by lower purchased transportation costs and a change of business mix between our lines of business.
Removed
Logistics operating income was 6% of revenue in 2022 and 4% of revenue in 2021. Operating income was $126 million as compared to $69 million in 2021, driven by the acquisitions of Choptank and TAGG, as well as yield improvements and higher operating efficiencies across all of our businesses.
Added
Operating income was $83 million as compared to $105 million last year driven by lower yields in brokerage and we incurred approximately $13 million of incremental costs related to warehouse consolidation to provide better customer service, our network alignment initiative within consolidation and fulfillment.
Removed
As a percentage of revenue, Purchased transportation and warehousing costs increased to 75.6% in 2022 versus 74.9% in 2021 due to increased fuel costs and accessorial expenses.
Added
As a percentage of revenue, purchased transportation and warehousing costs decreased to 74.2% in 2024 versus 74.8% in 2023 due to cost control initiatives. Purchased transportation and warehousing costs declined as compared to prior year due to lower volumes in brokerage, and reductions in third party carrier costs, partially offset by network alignment costs.
Removed
The increase in purchased transportation costs in 2022, as compared to 2021, was primarily due to increased rail costs, increased fuel costs, higher brokerage volume, higher third-party carrier costs, increased repositioning costs as well as increased business activity. Salaries and Benefits Salaries and benefits decreased to $543 million in 2022 from $590 million in 2021.
Added
Headcount, which includes drivers, warehouse personnel and office employees, was 6,471 as of December 31, 2024, which included 477 employees of EASO. As of December 31, 2023, headcount was 5,956. The increase in headcount was due primarily to the EASO transaction. Depreciation and Amortization Depreciation and amortization expense decreased to $141 million in 2024 from $144 million in 2023.
Removed
Headcount, which includes drivers, warehouse personnel and office employees, was 5,921 and 4,718 as of December 31, 2022 and 2021, respectively. The increase in the number of drivers and warehouse personnel was partially offset by a decrease in the headcount of office employees. The above statistics include the impact of both the TAGG and Choptank acquisitions.
Added
This expense decrease was primarily due to decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers as well as decreased tractor depreciation expense resulting from a smaller tractor fleet in 2024.
Removed
Depreciation and Amortization Depreciation and amortization expense increased to $132 million in 2022 from $116 million in 2021. This increase was primarily due to increased container, tractor and warehouse equipment depreciation expense as well as the amortization of intangibles related to the acquisitions of TAGG in August of 2022 and Choptank in October 2021.
Added
Amortization expense includes trade names, customer relationships, carrier network relationships, independent contractor relationships, developed technology and carrier and independent service provider relationships. 24 Insurance and Claims Insurance and claims expense decreased to $44 million in 2024 from $49 million in 2023.
Removed
Other Income (Expense) Other Expense decreased slightly to $7 million in 2022 from $8 million in 2021. Interest expense increased to $8 million in 2022 from $7 million in 2021 due primarily to higher interest rates on our debt and higher average debt balances.
Added
These increases were partially offset by the non-recurrence of an impairment of a right-of-use asset and a decrease in bad debt expense. Gain on Sale of Assets, Net Net gains on the sale of equipment decreased to $1 million in 2024 from $7 million in 2023.
Removed
Our effective tax rate was 23.7% in 2022 and 25.7% in 2021. The lower effective tax rate in 2022 compared to 2021 was primarily related to a change in our state apportionment factors, resulting in a reduction to the tax rate. Additionally, we decreased the valuation allowance on state tax incentives due to our increase in pre-tax income.
Added
We provided for income taxes using an effective rate of 21.5% in 2024 and an effective rate of 19.9% in 2023. The effective tax rate was higher in 2024 because there were significant refund claims made in 2023 related to a change in state apportionment methodology that did not reoccur in 2024.
Removed
The 2023 decrease was due to decreased container purchases of $60 million, less spend on our corporate headquarters of $17 million, less technology investments of $9 million 26 and less other transportation equipment purchases of $8 million.
Added
Logistics revenue decreased 14% to $1.8 billion primarily driven by lower revenue per load in our brokerage service line and lower managed transportation and final mile service line revenue, partially offset by an increase in consolidation and fulfillment revenue. Brokerage volumes were flat compared to the prior year. Logistics operating income was 6% of revenue in both 2023 and 2022.

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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 changeAny material increase in market interest rates would not have a material impact on the results of operations for the year ended December 31, 2023. Although we conduct business in foreign countries, international operations are not material to our consolidated financial position, results of operations, or cash flows.
Biggest changeAny material increase in market interest rates would not have a material impact on the results of operations for the year ended December 31, 2024.
To date, 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. We do not use financial instruments for trading purposes. 29
To date, 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. We do not use financial instruments for trading purposes.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk related to changes in interest rates. The Company maintains a bank line of credit and has both fixed and variable rate debt as described in Note 10 to the consolidated financial statements.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk: We are exposed to market risk related to changes in interest rates. We maintain a bank line of credit and have both fixed and variable rate debt as described in Note 10 to the consolidated financial statements.
Removed
Additionally, foreign currency transaction gains and losses were not material to our results of operations for the year ended December 31, 2023.
Added
Foreign Currency Exchange Rate Risk: We are exposed to fluctuations in foreign currency exchange rates, primarily with respect to the Mexican Peso, which may affect our net investment in foreign subsidiaries and may cause fluctuations in cash flows related to foreign denominated transactions. We are also exposed to the translation of foreign currency earnings to the U.S. dollar.
Removed
Accordingly, we are not currently subject to material foreign currency exchange rate risks from the effects that exchange rate movements of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign investment.
Added
A hypothetical 10% change in the value of the U.S. dollar in relation to the Mexican Peso would have had an impact of approximately $2 million on our 2024 operating revenue. This amount is not indicative of the hypothetical net income impact due to partially offsetting impacts on operating expenses in those currencies.
Added
A hypothetical 10% change in the value of the U.S. dollar in relation to the Mexican Peso would have had an impact of approximately $10 million on our consolidated foreign net assets as of December 31, 2024. 31

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