This Management's Discussion and Analysis of Financial Condition and Results of
Operations generally discusses our 2021 and 2020 results and year-to-year
comparisons between 2021 and 2020. Discussions of our 2019 results and
year-to-year comparisons between 2020 and 2019 that are not included in this
Annual Report on Form 10-K can be found in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in Part II, Item 7 of our
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which
was filed with the Securities and Exchange Commission on February 24, 2021.


We are one of the largest North American less-than-truckload ("LTL") motor
carriers. We provide regional, inter-regional and national LTL services through
a single integrated, union-free organization. Our service offerings, which
include expedited transportation, are provided through an expansive network of
service centers located throughout the continental United States. Through
strategic alliances, we also provide LTL services throughout North America. In
addition to our core LTL services, we offer a range of value-added services
including container drayage, truckload brokerage and supply chain consulting.
More than 98% of our revenue has historically been derived from transporting LTL
shipments for our customers, whose demand for our services is generally tied to
industrial production and the overall health of the U.S. domestic economy.

In analyzing the components of our revenue, we monitor changes and trends in our
LTL volumes and LTL revenue per hundredweight. While LTL revenue per
hundredweight is a yield measurement, it is also a commonly-used indicator for
general pricing trends in the LTL industry. This yield metric is not a true
measure of price, however, as it can be influenced by many other factors, such
as changes in fuel surcharges, weight per shipment and length of haul. As a
result, changes in revenue per hundredweight do not necessarily indicate actual
changes in underlying base rates. LTL revenue per hundredweight and the key
factors that can impact this metric are described in more detail below:

• LTL revenue per quintal – Our LTL transport services are

price generally based on weight, product and distance. This

the measure reflects the application of our pricing policies to

the services we provide, which are influenced by competitive market conditions

and our growth objectives. Generally, freight is rated by a class system,

which is established by the National Motor Freight Traffic Association,

Inc. Light and bulky cargo usually has a higher class and its price is

revenue per quintal higher than dense and heavy freight. Fuel

surcharges, ancillary charges, revenue adjustments and revenue for

undelivered freight is included in this measurement. Income for

undelivered freight is reported for financial statement purposes in

in accordance with our revenue recognition policy; however, we believe

including it in our measures of revenue per quintal results in greater

accurate representation of the underlying changes in our returns in

match the total revenues invoiced with the corresponding weight of those


• LTL Weight Per Shipment – ​​Fluctuations in weight per shipment may indicate

changes in the composition of the freight we receive from our customers, as well as

changes in the number of units included in a shipment. Generally,

increases in weight per shipment indicate higher demand for our customers

products and increased economic activity overall. Weight changes by

shipping may also be influenced by changes between LTL and other modes of transportation.

transportation, such as truckload and intermodal, in response to capacity,

service and price issues. Weight fluctuations per shipment in general

have an opposite effect on our turnover per quintal, such as a decrease in

        weight per shipment will typically cause an increase in revenue per

• Average transport length: we consider transport lengths less than 500 miles

be regional traffic, haul lengths between 500 miles and 1,000 miles

be inter-regional traffic and haul lengths greater than 1,000 miles

be domestic traffic. This metric is used to analyze our tonnage and

price trends for shipments with similar characteristics, and also allows

for purposes of comparison with other transportation providers serving

markets. By analyzing this metric, we can determine success and growth

potential of our service products in these markets. The length changes of

transport generally have a direct effect on our turnover per quintal, because

an increase in trip length will generally lead to an increase in revenue

per quintal.

• LTL revenue per shipment – ​​This metric is primarily determined by the

three measurements listed above and is used in conjunction with the number of

LTL shipments we receive to assess LTL revenue.

Our primary revenue focus is to increase density, which is shipment and tonnage
growth within our existing infrastructure. Increases in density allow us to
maximize our asset utilization and labor productivity, which we measure over
many different functional areas of our operations including linehaul load
factor, pickup and delivery ("P&D") stops per hour, P&D shipments per hour,
platform pounds handled per hour and platform shipments per hour. In addition to
our focus on density and operating efficiencies, it is critical for us to obtain
an appropriate yield, which is measured as revenue per hundredweight, on the
shipments we handle to offset our cost inflation and support our ongoing
investments in capacity and technology. We regularly monitor the components of
our pricing, including base freight rates, accessorial charges and fuel
surcharges. The fuel surcharge is generally designed to offset fluctuations in
the cost of our petroleum-based products and is indexed to diesel fuel prices
published by the U.S.


Department of Energy, which reset each week. We believe our yield management
process focused on individual account profitability, and ongoing improvements in
operating efficiencies, are both key components of our ability to produce
profitable growth.

Our primary cost elements are direct wages and benefits associated with the
movement of freight, operating supplies and expenses, which include diesel fuel,
and depreciation of our equipment fleet and service center facilities. We gauge
our overall success in managing costs by monitoring our operating ratio, a
measure of profitability calculated by dividing total operating expenses by
revenue, which also allows for industry-wide comparisons with our competition.

We regularly upgrade our technological capabilities to improve our customer
service and lower our operating costs. Our technology provides our customers
with visibility of their shipments throughout our network, increases the
productivity of our workforce, and provides key metrics that we use to monitor
and enhance our processes.

Results of Operations

The following table shows, for the years indicated, expenses and other items as a percentage of operating revenue:

                                   2021        2020
Revenue from operations             100.0 %     100.0 %
Operating expenses:
Salaries, wages and benefits         47.0        51.2
Operating supplies and expenses      10.8         9.3
General supplies and expenses         2.6         2.7
Operating taxes and licenses          2.5         2.9
Insurance and claims                  1.0         1.1
Communication and utilities           0.7         0.8
Depreciation and amortization         4.9         6.5
Purchased transportation              3.5         2.4
Miscellaneous expenses, net           0.5         0.5
Total operating expenses             73.5        77.4
Operating income                     26.5        22.6
Interest expense, net                 0.0         0.1
Other expense, net                    0.1         0.1
Income before income taxes           26.4        22.4
Provision for income taxes            6.7         5.6
Net income                           19.7 %      16.8 %

The main financial and operational indicators for 2021 and 2020 are presented below:

                                              2021            2020            Change         % Change
Work days                                          252             254              (2 )         (0.8 )
Revenue (in thousands)                     $ 5,256,328     $ 4,015,129     $ 1,241,199           30.9
Operating ratio                                   73.5 %          77.4 %
Net income (in thousands)                  $ 1,034,375     $   672,682     $   361,693           53.8
Diluted earnings per share                 $      8.89     $      5.68     $      3.21           56.5
LTL tons (in thousands)                         10,119           8,770           1,349           15.4
LTL shipments (in thousands)                    12,880          10,869           2,011           18.5
LTL weight per shipment (lbs.)                   1,571           1,614             (43 )         (2.7 )
LTL revenue per hundredweight              $     25.59     $     22.62     $      2.97           13.1
LTL revenue per shipment                   $    402.01     $    364.94     $     37.07           10.2
LTL revenue per intercity mile             $      7.32     $      6.42     $      0.90           14.0
LTL intercity miles (in thousands)             707,611         617,805          89,806           14.5
Average length of haul (miles)                     935             925              10            1.1

Our financial results for 2021 reflect the highest annual revenue and
profitability in our Company's history. We believe the increase in our annual
revenue to $5.3 billion in 2021 was driven by the consistent execution of our
long-term strategy of providing superior service to customers at a fair price,
while continuing to invest in capacity and technology to support the increased
customer demand for our services. Our revenue growth reflects higher shipment
volumes and further improvements in our yield, both of which were supported by
the strength of the domestic economy. The increased freight density in our
service center network and improvement in our yield, combined with improved
operating efficiencies, led to the 390 basis-point improvement in our operating
ratio to 73.5%


for 2021 compared to 2020. As a result, net earnings and diluted earnings per share increased by 53.8% and 56.5%, respectively, in 2021 compared to 2020.


Revenue increased $1.24 billion, or 30.9%, in 2021 compared to 2020, due to
increases in both our LTL tonnage and LTL revenue per hundredweight. The
increase in tonnage resulted from higher LTL shipment volumes that were
partially offset by a decrease in LTL weight per shipment. Our LTL weight per
shipment declined due primarily to our continuing efforts to reduce the number
of heavy-weighted and larger, harder-to-handle types of shipments in our
network. We believe the increase in LTL shipments was driven by higher customer
demand for our superior service, coupled with our available network capacity and
the strength of the U.S. domestic economy.

Our LTL revenue per hundredweight increased 13.1% in 2021 compared to 2020. We
believe the increase in LTL revenue per hundredweight was driven by the success
of our long-term pricing strategy as well as changes in mix of our freight. The
increase also reflects the positive impact of a decline in weight per shipment
and an increase in average length of haul on this metric. Excluding fuel
surcharges, LTL revenue per hundredweight increased 8.8% in 2021 compared to

January 2022 Update

Revenue per day increased 25.7% in January 2022 compared to the same month last
year. LTL tons per day increased 7.7%, due primarily to a 10.2% increase in LTL
shipments per day that was offset by a 2.2% decrease in LTL weight per shipment.
LTL revenue per hundredweight increased 16.8% as compared to the same month last
year. LTL revenue per hundredweight, excluding fuel surcharges, increased 11.0%
as compared to the same month last year.

Operating costs and other expenses

Salaries, wages, and benefits increased $414.1 million, or 20.2%, in 2021 as
compared to 2020, due to a $272.0 million increase in the costs attributable to
salaries and wages and a $142.1 million increase in employee benefit costs. The
increase in salaries and wages was due primarily to increases in the average
number of active full-time employees and increases in our employees' wage rates.
Our average number of active full-time employees increased 3,034, or 15.9%,
during 2021 as compared to 2020. We believe our full-time employee headcount
will continue to increase as we hire employees to balance our workforce with
ongoing growth in customer demand and shipment trends. Our employees' salaries
and wages also increased as a result of the annual wage increases provided to
our employees in September 2021, as well as higher performance-based

Our productive labor costs, which include wages for drivers, platform employees,
and fleet technicians, improved as a percent of revenue to 25.1% in 2021
compared to 27.8% in 2020. This improvement includes the impact of increases in
our linehaul laden load average and P&D shipments per hour as we increased
density across our network, as well as declines in our platform shipments per
hour as we trained our new employees. Our other salaries and wages as a percent
of revenue also decreased to 9.3% in 2021 as compared to 10.4% in 2020.

The increase in the costs attributable to employee benefits of $142.1 million,
or 27.4%, includes the impact of the increase in the number of full-time
employees eligible for our benefits. Our employee benefit costs also increased
due to additional holiday pay benefits provided in 2021 and increases in certain
retirement benefit plan costs directly linked to our net income. In addition,
our group health and dental costs increased due to increases in costs per claim,
as well as higher claim volumes per covered employee. As a result of these cost
increases, our employee benefit costs as a percent of salaries and wages
increased to 36.6% in 2021 from 33.8% in 2020.

Operating supplies and expenses increased $194.2 million, or 52.0%, in 2021 as
compared to 2020, due primarily to an increase in our costs for diesel fuel. The
cost of diesel fuel, excluding fuel taxes, represents the largest component of
operating supplies and expenses, and can vary based on both the average price
per gallon and consumption. The increase in our diesel fuel costs was primarily
due to a 60.3% increase in our average cost per gallon of diesel fuel during
2021. In addition, our gallons consumed increased 13.5% in 2021 as compared to
2020 due to an increase in miles driven. We do not use diesel fuel hedging
instruments; therefore, our costs are subject to market price fluctuations. Our
other operating supplies and expenses remained relatively consistent as a
percent of revenue between the periods compared.

Depreciation and amortization costs were relatively consistent in 2021 as
compared to 2020. While our capital expenditures were significantly higher in
2021 compared to 2020, our 2021 depreciation and amortization costs were
impacted by our planned reduction in capital expenditures for revenue equipment
in 2020 as we balanced our fleet with volumes, as well as delays in receipt of
certain revenue equipment included in our 2021 capital expenditure plan. We
believe depreciation costs will increase in future periods as we execute our
2022 capital expenditure plan. While our investments in real estate, equipment,
and technology can increase our costs in the short-term, we believe these
investments are necessary to support our continued long-term growth and
strategic initiatives.



Purchased transportation expense increased $87.8 million, or 89.7%, in 2021 as
compared to 2020, due primarily to an increase in our use of third-party
transportation providers to supplement our workforce and equipment as demand for
our services increased. We expect to continue to purchase supplemental
transportation services until the capacity of our team and fleet can fully
support our anticipated growth.

Our effective tax rate in 2021 was 25.5% compared to 25.4% in 2020. Our effective tax rate generally exceeds the federal statutory rate due to the impact of state taxes and, to a lesser extent , certain other non-deductible items.

Cash and capital resources

A summary of our cash flows is shown below:

(In thousands)                                        2021            2020
Cash and cash equivalents at beginning of year     $   401,430     $  403,571
Cash flows provided by (used in):
Operating activities                                 1,212,606        933,024
Investing activities                                  (455,288 )     (551,663 )
Financing activities                                  (696,184 )     (383,502 )
Increase (decrease) in cash and cash equivalents        61,134         (2,141 )
Cash and cash equivalents at end of year           $   462,564     $  

401 430

The increase in our cash flows provided by operating activities during 2021 as
compared to 2020 was impacted by an increase in our income before income taxes
of $487.1 million, which was partially offset by an increase in income taxes
paid of $86.3 million and fluctuations in certain working capital accounts.

The decrease in our cash flows used in investing activities during 2021 as
compared to 2020 was due primarily to proceeds from the maturities of our
short-term investments in excess of purchases, partially offset by increases in
real estate and equipment purchases under our capital expenditure plan for 2021
as compared to 2020. Changes in our capital expenditure plans are more fully
described below in "Capital Expenditures".

The increase in our cash flows used in financing activities during 2021 as
compared to 2020 was due primarily to increases in share repurchases and cash
dividends paid to shareholders. These increases were partially offset by
reductions in proceeds from debt issuances and scheduled principal payments
during 2021 as compared to 2020. Our return of capital to shareholders is more
fully described below under "Stock Repurchase Program" and "Dividends to

We have five primary sources of available liquidity: cash flows from operations,
our existing cash and cash equivalents, short-term investments, available
borrowings under our second amended and restated credit agreement with Wells
Fargo Bank, National Association serving as administrative agent for the
lenders, which we entered into on November 21, 2019 (the "Credit Agreement"),
and our Note Purchase and Private Shelf Agreement with PGIM, Inc. ("Prudential")
and certain affiliates and managed accounts of Prudential, which we entered into
on May 4, 2020 (the "Note Agreement"). Our Credit Agreement and the Note
Agreement are described in more detail below under "Financing Arrangements". We
believe we also have sufficient access to debt and equity markets to provide
other sources of liquidity, if needed.

Capital expenditure

The table below shows our net capital expenditures for property, plant and equipment, including those obtained through non-cash transactions, for the years ended December 31, 2021 and 2020:

                                  December 31,
(In thousands)                 2021          2020
Land and structures          $ 252,155     $ 181,221
Tractors                       130,772        17,518
Trailers                       140,595         2,151
Technology                      17,139        11,925

Other equipment and assets 25,450 12,266 Less: Proceeds from sales (19,548 ) (3,690 ) Total

                        $ 546,563     $ 221,391

Our capital expenditures vary based upon the projected increase in the number
and size of our service center facilities necessary to support our plan for
long-term growth, our planned tractor and trailer replacement cycle, and
forecasted tonnage and shipment growth. Expenditures for land and structures can
be dependent upon the availability of land in the geographic areas where we are



looking to expand. We historically spend 10% - 15% of our revenue on capital
expenditures each year. Our 2020 capital expenditures were lower than normal,
particularly with respect to revenue equipment and real estate, due to economic
uncertainty as a result of the COVID-19 pandemic. We expect to continue to
maintain a high level of capital expenditures in order to support our long-term
plan for market share growth.

We currently estimate capital expenditures will be approximately $825 million
for the year ending December 31, 2022. Approximately $300 million is allocated
for the purchase of service center facilities, construction of new service
center facilities or expansion of existing service center facilities, subject to
the availability of suitable real estate and the timing of construction
projects; approximately $485 million is allocated for the purchase of tractors
and trailers; and approximately $40 million is allocated for investments in
technology and other assets. We expect to fund these capital expenditures
primarily through cash flows from operations, our existing cash and cash
equivalents, short-term investments and, if
needed, borrowings available under our Credit Agreement or Note Agreement. We
believe our current sources of liquidity will be sufficient to satisfy our
expected capital expenditures for the next twelve months and in the longer term.

Share buyback program

On May 1, 2020, we announced that our Board of Directors had approved a two-year
stock repurchase program authorizing us to repurchase up to an aggregate of
$700.0 million of our outstanding common stock (the "2020 Repurchase Program").
The 2020 Repurchase Program became effective upon the termination of our $350.0
million repurchase program on May 29, 2020. On July 28, 2021, we announced that
our Board of Directors had approved a new stock repurchase program authorizing
us to repurchase up to an aggregate of $2.0 billion of our outstanding common
stock (the "2021 Repurchase Program"). The 2021 Repurchase Program, which does
not have an expiration date, began after the completion of the 2020 Repurchase

Under our repurchase programs, we may repurchase shares from time to time in
open market purchases or through privately negotiated transactions. Shares of
our common stock repurchased under our repurchase programs are canceled at the
time of repurchase and are classified as authorized but unissued shares of our
common stock.

AT December 31, 2021our share buyback programs had $2.02 billion remaining available, including $62.5 million which has been deferred until final settlement of our accelerated share repurchase agreement in January 2022. After the final settlement, there is $1.96 billion remaining available and uncommitted.

Dividends to shareholders

On February 21, 2020, we announced that our Board of Directors approved a
three-for-two split of our common stock for shareholders of record as of the
close of business on the record date of March 10, 2020. On March 24, 2020, those
shareholders received one additional share of common stock for every two shares
owned. In lieu of fractional shares, shareholders received a cash payment based
on the average of the high and low sales prices of our common stock on the
record date.

All references in this report to dividend amounts have been retroactively restated to reflect this stock split.

Our Board of Directors also declared quarterly cash dividends that totaled $0.80
per share for the year ended December 31, 2021 and quarterly cash dividends that
totaled $0.60 per share for the year ended December 31, 2020.

Funding agreements

Note Agreement

The Note Agreement, which is uncommitted and subject to Prudential's sole
discretion, provides for the issuance of senior promissory notes with an
aggregate principal amount of up to $350.0 million through May 4, 2023. Pursuant
to the Note Agreement, we issued $100.0 million aggregate principal amount of
senior promissory notes (the "Series B Notes") on May 4, 2020. Borrowing
availability under the Note Agreement is reduced by the outstanding amount of
the existing Series B Notes, and all other senior promissory notes issued
pursuant to the Note Agreement.

The Series B Notes bear an annual interest rate of 3.10% and mature on May 4,
2027, unless prepaid. Principal payments are required annually beginning on May
4, 2023 in equal installments of $20.0 million through May 4, 2027. The Series B
Notes are senior unsecured obligations and rank pari passu with borrowings under
our Credit Agreement or other senior promissory notes issued pursuant to the
Note Agreement.


credit agreement

The Credit Agreement provides for a five-year, $250.0 million senior unsecured
revolving line of credit and a $150.0 million accordion feature, which if fully
exercised and approved, would expand the total borrowing capacity up to an
aggregate of $400.0 million. Of the $250.0 million line of credit commitments
under the Credit Agreement, up to $100.0 million may be used for letters of

At our option, borrowings under the Credit Agreement bear interest at either:
(i) LIBOR (including applicable successor provisions) plus an applicable margin
(based on our ratio of net debt-to-total capitalization) that ranges from 1.000%
to 1.375%; or (ii) a Base Rate, as defined in the Credit Agreement, plus an
applicable margin (based on our ratio of net debt-to-total capitalization) that
ranges from 0.000% to 0.375%. Letter of credit fees equal to the applicable
margin for LIBOR loans are charged quarterly in arrears on the daily average
aggregate stated amount of all letters of credit outstanding during the quarter.
Commitment fees ranging from 0.100% to 0.175% (based upon the ratio of net
debt-to-total capitalization) are charged quarterly in arrears on the aggregate
unutilized portion of the Credit Agreement.

For the periods covered by the credit agreement, the applicable margin on LIBOR loans and letter of credit fees was 1.000% and the commitment fees were 0.100%.

The outstandings and the borrowing capacity available under the Credit Agreement are presented below:

                                      December 31,
(In thousands)                    2021          2020
Facility limit                  $ 250,000     $ 250,000
Line of credit borrowings               -             -

Outstanding letters of credit (39,169 ) (42,134 ) Available borrowing capacity $210,831 $207,866

General debt provisions

The Credit Agreement and Note Agreement contain customary covenants, including
financial covenants that require us to observe a maximum ratio of debt to total
capital and a minimum fixed charge coverage ratio. The Credit Agreement and Note
Agreement also include a provision limiting our ability to make restricted
payments, including dividends and payments for share repurchases, unless, among
other conditions, no defaults or events of default are ongoing (or would be
caused by such restricted payment). We were in compliance with all covenants in
our outstanding debt instruments for the period ended December 31, 2021.

We do not anticipate financial performance that would cause us to violate any
such covenants in the future, and we believe the combination of our existing
Credit Agreement and Note Agreement along with our additional borrowing capacity
will be sufficient to meet foreseeable seasonal and long-term capital needs.

The interest rate is fixed on the Note Agreement. Therefore, short-term exposure
to fluctuations in interest rates is limited to our Credit Agreement. We do not
currently use interest rate derivative instruments to manage exposure to
interest rate changes.

Contractual obligations

The following table summarizes our significant contractual obligations as of
December 31, 2021:

                                                            Payments due by period
Contractual Obligations (1)                          Less than                                 More than
(In thousands)                           Total        1 year       1-3 years     3-5 years      5 years
Series B Notes                        $ 110,354     $   3,100     $  44,762     $  42,281     $  20,211
Operating lease obligations (2)         121,248        16,909        29,130        21,746        53,463
Purchase obligations and Other          120,344       104,589        15,755             -             -
Total                                 $ 351,946     $ 124,598     $  89,647     $  64,027     $  73,674

(1) Contractual obligations include principal and interest on our Series B Notes;

operating leases consisting mainly of property and automobile leases;

and purchase obligations relating to non-cancellable purchase orders for (i)

equipment scheduled for delivery in 2022, and (ii) information technology

The agreements. Please refer to the information regarding interest rates and

balance on our revolving credit facility in this section above and also in

Note 2 of the notes to the financial statements included in section 8 of this


(2) Rents include lease extensions of which it is reasonably certain



Critical accounting policies

In preparing our financial statements, we apply the following significant accounting policies which we believe affect our judgments and estimates of the amounts recognized in certain assets, liabilities, income and expenses. These critical accounting policies, which are those that have, or are reasonably likely to have, a material effect on our financial condition or results of operations, are described in more detail in note 1 of the notes to the financial statements included in point 8 of this report. .

Revenue recognition

Our revenue is generated from providing transportation and related services to
customers in accordance with the bill of lading ("BOL") contract, our general
tariff provisions and contractual agreements. Generally, our performance
obligations begin when we receive a BOL from a customer and are satisfied when
we complete the delivery of a shipment and related services. We recognize
revenue for our performance obligations under our customer contracts over time,
as our customers receive the benefits of our services in accordance with
Accounting Standards Update ("ASU") 2014-09. With respect to services not
completed at the end of a reporting period, we use a percentage of completion
method to allocate the appropriate revenue to each separate reporting period.
Under this method, we develop a factor for each uncompleted shipment by dividing
the actual number of days in transit at the end of a reporting period by that
shipment's standard delivery time schedule. This factor is applied to the total
revenue for that shipment and revenue is allocated between reporting periods
accordingly. A hypothetical change of 10% in our percentage of completion
estimate would not have a material effect on our recorded revenue.

Insurance claims and provisions

Claims and insurance accruals reflect the estimated cost of various claims,
including those related to bodily injury/property damage ("BIPD") and workers'
compensation. All related costs associated with BIPD claims are charged to
insurance and claims expense, and all related costs associated with workers'
compensation claims are charged to employee benefits expense.

Insurers providing excess coverage above a company's self-insured retention or
deductible levels typically adjust their premiums to cover insured losses and
for other market factors. As a result, we periodically evaluate our self-insured
retention and deductible levels to determine the most cost-efficient balance
between our exposure and excess coverage.

In establishing accruals for claims and expenses, we evaluate and monitor each
claim individually, and we use factors such as historical claims development
experience, known trends and third-party actuarial estimates to determine the
appropriate reserves for potential liabilities. We believe the assumptions and
methods used to estimate these liabilities are reasonable; however, any changes
in the severity or number of reported claims, significant changes in medical
costs and regulatory changes affecting the administration of our plans could
significantly impact the determination of appropriate reserves in future
periods. Our accrued liability for insurance, BIPD claims, and workers'
compensation claims totaled $126.4 million and $120.6 million at December 31,
2021 and 2020, respectively. Claims and insurance accruals are discussed further
in Note 1 of the Notes to the Financial Statements included in Item 8 of this

Property and Equipment

Property and equipment are recorded at cost and depreciated on a straight-line
basis over their estimated economic lives. We use historical experience, certain
assumptions and estimates in determining the economic life of each asset. When
indicators of impairment exist, we review property and equipment for impairment
due to changes in operational and market conditions, and we adjust the carrying
value and economic life of any impaired asset as appropriate.

Estimated economic lives for structures are 7 to 30 years, revenue equipment is
4 to 15 years, other equipment is 2 to 20 years, and leasehold improvements are
the lesser of the economic life of the leasehold improvement or the remaining
life of the lease. The use of different assumptions, estimates or significant
changes in the resale market for our equipment could result in material changes
in the carrying value and related depreciation of our assets. Depreciation
expense in 2021 totaled $259.9 million. A hypothetical change of 1% in the
estimated useful lives of all depreciable assets would not have a material
impact on our financial results.


Most of our expenses are affected by inflation, which typically results in
increased operating costs. In response to fluctuations in the cost of petroleum
products, particularly diesel fuel, we generally include a fuel surcharge in our
tariffs and contractual agreements. The fuel surcharge is designed to offset the
cost of diesel fuel above a base price and fluctuates as diesel fuel prices
change from the base, which is generally indexed to the DOE's published fuel
prices that reset each week. Volatility in the price of diesel fuel, independent
of inflation, has impacted our business, as described in this report. However,
we do not believe inflation has had a material effect on our results of
operations for any of the past three years.



Related Party Transactions

Family Relationships

John R. Congdon, Jr., a member of our Board of Directors, is the cousin of David
S. Congdon, Executive Chairman of our Board of Directors. Our employment
agreement with David S. Congdon is incorporated by reference as an exhibit to
this Annual Report on Form 10-K. We regularly disclose the amount of
compensation that we pay to these individuals, as well as the compensation paid
to any of their family members employed by us that from time to time may require
disclosure, in the proxy statement for our Annual Meeting of Shareholders.

Audit Committee Approval

The Audit Committee of our Board of Directors reviews and approves all related party transactions in accordance with our Related Party Transactions Policy.

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