We have two reportable segments – TTS and Werner Logistics. Our TTS segment is comprised of Dedicated and One-Way Truckload. Dedicated had 4,9455,265 trucks as of December 31, 20202023 and provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers. One-Way Truckload had 2,8852,735 trucks as of December 31, 20202023 and includes the following operating fleets: (i) the medium-to-long-haul van (“Van”) fleet transports a variety of consumer nondurable products and other commodities in truckload quantities over irregular routes using dry van trailers, including Mexico cross-border routes; (ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams; (iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States; and (iv) the Temperature Controlled fleet provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers. Our TTS fleets operate throughout the 48 contiguous U.S. states pursuant to operating authority, both common and contract, granted by the U.S. Department of Transportation (“DOT”) and pursuant to intrastate authority granted by various U.S. states. We also have authority to operate in several provinces of Canada and to provide through-trailer service into and out of Mexico. The principal types of freight we transport include retail store merchandise, consumer products, food and beverage products and manufactured products. We focus on transporting consumer nondurable products that generally ship more consistently throughout the year and whose volumes are generally more stable during a slowdown in the economy.

Our Werner Logistics segment is a non-asset-based transportation and logistics providerprovider. Werner Logistics provides services throughout North America and generates the majority of our non-trucking revenues through fourthree operating units. These fourthree Werner Logistics operating units are as follows: (i) Truckload Logistics, which uses contracted carriers to complete shipments for brokerage customers and freight management customers for which we offer a full range of single-source logistics management services and solutions; (ii) the intermodal (“Intermodal”) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation; (iii) Werner Global Logistics international (“WGL”) provides complete management of global shipments from origin to destination using a combination of air, ocean, truck and rail transportation modes; and (iv)(iii) Werner Final Mile (“Final Mile”) offers homeresidential and businesscommercial deliveries of large or heavy items using third-party agents, independent contractors, and Company employees with two associatestwo-person delivery teams operating a liftgate straight truck. In first quarter 2021, we completed the sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group. WGL generated revenues of $53 million in 2020. Prior to the sale of WGL, Werner Logistics had transportationprovided international services contractsthroughout North America and Asia, with 28,622 carriersadditional coverage throughout Australia, Europe, South America, and Africa.

On October 1, 2022, we acquired 100% of the equity interests in FAB9, Inc., doing business as Baylor Trucking, Inc. (“Baylor”). Baylor, based in Milan, Indiana, operates in the east central and south central United States. Prior to the acquisition, Baylor achieved revenues of $81.5 million for the 12-month period ended August 31, 2022. Revenues generated by Baylor are reported in One-Way Truckload within our TTS segment.

On July 1, 2021, we acquired an 80% equity ownership interest in ECM Associated, LLC ("ECM”). ECM provides regional truckload carrier services in the Mid-Atlantic, Ohio and Northeast regions of the United States. Prior to the acquisition, ECM achieved revenues of $108 million in 2020. Revenues generated by ECM are reported in One-Way Truckload within our TTS segment.

We have a diversified freight base but are dependent on a relatively small number of customers for a significant portion of our revenues. During 2020,2023, our largest 5, 10, 25 and 50 customers comprised 36%35%, 49%48%, 67%65% and 79%78% of our revenues, respectively. Our largest customer, Dollar General, accounted for 12%10% of our total revenues in 2020.2023. Revenues generated by Dollar General are reported in both of our reportable operating segments. The industry groups of our top 50 customers are 53%57% retail and consumer products, 20% manufacturing/industrial, 18% food and beverage, 15% manufacturing/industrial, and 9%8% logistics and other. Many of our One-Way Truckload customer contracts may be terminated upon 30 days’ notice, which is common in the truckload industry. We are moving towardhave longer-term Dedicated customer contracts, most of which are two to five years in length (including some contracts with annual evergreen clauses) and generally may be terminated by either party typically upon 90 days or morea notice period following the

expiration of the contract’s first year. We typically renegotiate rates with our customers for these Dedicated contracts on an annual basis.

All of ourOur company and independent contractor tractors are equipped with communication devices. These devices enable us and our drivers to conduct two-way communication using standardized and freeform messages. This technology also allows us to plan and monitor shipment progress. We automatically monitor truck movement and obtain specific data on the location of all trucks in the fleet every five minutes.at fixed intervals. Using the real-time global positioning data obtained from the devices, we have advanced application systems to improve customer and driver service. Examples of such application systems include: (i) an electronic logging system which records and monitors drivers’ hours of service and integrates with our information systems to pre-plan driver shipment assignments based on real-time available driving hours; (ii) software that pre-plans shipments drivers can trade enroute to meet driver home-time needs without compromising on-time delivery schedules; and (iii) automated “possible late load” tracking that informs the operations department of trucks possibly operating behind schedule, allowing us to take preventive measures to avoid late deliveries. In 1998, we began a successful pilot program and subsequently became the first trucking company in the United States to receive an exemption from DOT to use a global positioning-based paperless log system as an alternative to the paper logbooks traditionally used by truck drivers to track their daily work activities. We have used electronic logging devices (“ELDs”) to monitor and enforce drivers’ hours of service since 1996. During 2020,Since January 2021, we replaced our previous communications technology with a newhave used an untethered, tablet-based telematics solution that provides an enhanced and more efficient driver experience.

During the COVID-19 pandemic, the transportation industry has beenwas designated by the U.S. government as an essential industry for keeping the U.S. supply chain moving. Our drivers and mechanics have beenwere on the front lines to ensure the delivery of essential products, and we take this responsibility seriously. Our primary focus will always be protecting the health and personal safety of our associates, their families and communities, and our customers. Our leadership team meets frequently to address issues related to customers, freight, drivers, safety, staffing, human resources, and costs and provides regular updates to all our associates. Throughout our offices and terminal network, we are closely followingfollow the safety guidelines set forth by the Centers for Disease Control and Prevention (“CDC”)(CDC) and World Health Organization (“WHO”), including hygiene and social distancing. We made and intend to continue making significant investments in personal protective products to keep our associates safe, and over half of our office associates continue working from home. We introduced Werner-specific associate relief plans to provide rapid and needed assistance to those Werner associates affected by the virus.(WHO).

At times, there are driver shortages in the trucking industry. Availability of experienced drivers can be affected by (i) changes in the demographic composition of the workforce; (ii) alternative employment opportunities other than truck driving that become available in the economy; and (iii) individual drivers’ desire to be home more frequently. We believe that a declining number of, and increased competition for, driver training school graduates, aging truck driver demographics and increased truck safety regulations are tighteninghave tightened driver supply.

At Werner, we continue to take actions to strengthen our driver recruiting and retention to make Werner a preferred choice for the best drivers. Our efforts include raisingoffering competitive driver pay, maintaining a new truck and trailer fleet, purchasing best-in-class safety features for all new trucks, investing in our driver training school network and collaborating with customers to improve or eliminate unproductive freight. We are focused on providing strong mileage utilization and a large percentage of driving jobs in shorter-haul operations (such as Dedicated and Regional) that allow drivers to return home more often. We continue to improve our terminal network to enhance the driver experience. Our new untethered, tablet-based telematics solution implemented in 2020 provides Werner drivers with a more efficient experience through smart workflow, best-in-class navigation, improved safety features and reduced manual data entry. While the trucking industry suffers from high driver turnover rates, we are proud that our efforts in recent years have continued to have positive results on our driver retention.

The average age of our TTS segment company truck fleet was 2.02.1 years at December 31, 2020,2023, compared to 1.92.3 years at December 31, 2019.2022. The average age of our trailer fleet was 4.04.9 years at both December 31, 2020 and2023, compared to 5.0 years at December 31, 2019. All of our2022. Our trucks are equipped with satellite tracking devices,tablet-based telematics, and nearly all of our company-owned trucks have collision mitigation safety systems and automated manual transmissions.

Our wholly-owned subsidiary, Werner Fleet Sales, sells our used trucks and trailers. Werner Fleet Sales has been in business since 1992 and operates in 8seven locations. WeAt times, we may also trade used trucks to original equipment manufacturers when purchasing new trucks.

Shortages of fuel, increases in fuel prices and rationing of petroleum products can have a material adverse effect on our operations and profitability. Our customer fuel surcharge reimbursement programs generally enable us to recover from our customers a majority, but not all, of higher fuel prices compared to normalized average fuel prices. These fuel surcharges, which automatically adjust depending on the U.S. Department of Energy (“DOE”) weekly retail on-highway diesel fuel prices, enable us to recoup much of the higher cost of fuel when prices increase and provide customers with the benefit of lower fuel costs when fuel prices decline. We do not generally recoup higher fuel costs for empty and out-of-route miles (which are not billable to customers) and truck idle time. We cannot predict whether fuel prices will increase or decrease in the future or the extent to which fuel surcharges will be collected from customers. As of December 31, 2020,2023, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

We maintain aboveground and underground fuel storage tanks at some of our terminals. Leakage or damage to these facilities could expose us to environmental clean-up costs. The tanks are routinely inspected to help prevent and detect such problems.

DOT and an agency within DOT, the Federal Motor Carrier Safety Administration (“FMCSA”),FMCSA, generally govern matters such as safety requirements and compliance, registration to engage in motor carrier operations, drivers’ hours of service (“HOS”), and certain mergers, consolidations, and acquisitions. Werner maintains a satisfactory safety rating, which is the highest available rating of the three safety ratings given by FMCSA. A conditional or unsatisfactory safety rating could adversely impact Werner’s business, as some of our customer contracts require a satisfactory rating. Werner must also comply with federal, state, and international regulations which govern equipment weight and dimensions.

FMCSA’s Compliance, Safety, Accountability (“CSA”) safety initiative monitors the safety performance of motor carriers. CSA uses the Safety Measurement System (“SMS”) to analyze data from roadside inspections, crash reports, and investigation results. The Fixing America’s Surface Transportation (“FAST”) Act of 2015 directed FMCSA to remove from public view certain information regarding a carrier’s compliance and safety performance. The FAST Act also instructed FMCSA to study

the accuracy of CSA and SMS data and issue a corrective action plan. The FMCSA provided a report to Congress in 2020 outlining the changes it may make to the CSA program; however, it remains unclear if, when, and to what extent any such changes will occur. Werner continues to monitor FMCSA’s actions and CSA related developments.

Interstate motor carriers are subject to the FMCSA HOS regulations, which govern our drivers’ operating hours. The HOS of Drivers Final Rule which became effective September 29, 2020, includes provisions for short haul, adverse driving conditions, a revision to the 30-minute rest break requirement, and split-sleeper berth which allows drivers to split their 10-hour off duty period in different ways. In August 2020, FMCSA proposed a pilot program allowing commercial drivers to pause their 14-hour driving window, which Werner continues to monitor.

FMCSA issued its final rule for Entry-Level Driver Training (“ELDT”) in December 2016. The original complianceHowever, after delays announced by FMCSA, the effective date was February 7, 2020. However, FMCSA announced2022. ELDT now requires anyone wanting to obtain a two-year delayCommercial Driver’s License to successfully complete a specific program of theory and behind-the-wheel instruction provided by a school or other entity on FMCSA’s new Training Provider Registry. We are in compliance with the rule, and the new effective date is February 7, 2022. We will continue to monitor the status of this rulemaking as it will directly impact our training schools and the hiring of professional drivers.ELDT rule.

The U.S. Environmental Protection Agency (“EPA”)Infrastructure Investment and Jobs Act of 2021 required the FMCSA to establish a pilot program to allow persons ages 18, 19, and 20 to operate commercial motor vehicles in interstate commerce. The FMCSA’s Safe Driver Apprenticeship Pilot Program is currently accepting applications by motor carriers who are willing to participate in the pilot program, and FMCSA plans to limit the participation to 1,000 carriers and 3,000 apprentices.

EPA and DOT announced in August 2016 Phase 2 of the Greenhouse Gas and Fuel Efficiency Standards for Medium and Heavy-Duty Trucks. The final rule requires a reduction of carbon emissions and fuel savings from engines, vehicles, and new trailers to be phased in over the next decade. In January 2020, EPA announced an Advance Notice of Proposed Rulemaking that would establish new standards for highway heavy-duty engines to lower nitrogen oxide emissions. In August 2021, EPA announced plans to reduce greenhouse gas emissions from Heavy-Duty Trucks through a series of rulemakings over the next three years. In December 2022, EPA adopted its first final rule, which sets stronger emissions standards to reduce air pollution, including pollutants that create ozone and particulate matter, from heavy-duty vehicles and engines starting in model year 2027. In April 2023, EPA announced a proposed rule, Greenhouse Gas Emission Standards for Heavy-Duty Vehicles - Phase 3, which would phase in stronger greenhouse gas emissions standards and zero-emission vehicle requirements for heavy-duty trucks for model years 2028-2032. Werner continues monitoring any EPA-related developments impacting its fleet.

California’s ongoing emissions reduction goals have significantly impacted the industry. The California Air Resources Board (“CARB”) regulations not only apply to both in-state California intrastate carriers but also toand carriers outside of California who own or dispatch equipment in the state. Werner is impacted by various CARB regulations including the Truck and Bus Regulation, Clean Truck Check (heavy-duty inspection and maintenance), Advanced Clean Trucks, Advanced Clean Fleets, Temperature Refrigeration Units, among other currently effective and forthcoming regulations. Werner continues to structure our fleet plans to operate compliant equipment in California. Approximately 5% of our truck miles in 2023 were in the state of California.

Our operations are subject to applicable federal, state, and local environmental laws and regulations, many of which are implemented by the EPA and similar state regulatory agencies. These laws and regulations govern the management of hazardous wastes, discharge of pollutants into the air and surface and underground waters and disposal of certain substances. We do not believe that compliance with these regulations has a material effect on our capital expenditures, earnings, and competitive position.

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

Competition for the freight we transport or manage is based primarily on service, efficiency, available capacity and, to some degree, on freight rates alone. We believe that few other truckload carriers have greater financial resources, own more

equipment or carry a larger volume of freight than us. We believe we are one of the largest carriers in the truckload transportation industry based on total operating revenues.

Independent contractor availability may also be affected by both inflationary cost increases that are the responsibility of independent contractors and the availability and cost of equipment financing. On-goingOngoing federal and state legislative challenges to the independent contractor model could also affect independent contractor availability. In recent years, the topic of the classification of individuals as employees or independent contractors has gained increased attention among federal and state

necessary to attract and retain a sufficient number of drivers. These increases would negatively affect our results of operations to the extent that we would be unable to obtain corresponding freight rate increases.

Moreover, class action litigation in this area against other transportation companies hasDuring 2023, union organizing efforts occurred at two locations of a U.S. subsidiary, which resulted in significant damage awards and/fewer than 30 of our employees being represented by a union. Additional unionization, if broad-based, could have a material adverse effect on our costs, efficiency, and profitability. Driver or monetary settlements for workers who have been allegedly misclassified as independent contractors.other employee dissatisfaction and regulations that govern organization procedures could impact our ability to effectively or timely address any organization efforts.

At December 31, 2020,2023, we leased (i) small sales offices, brokerage officesoperational facilities, office space, and trailer parking yards in various locations throughout the United States and (ii) office space in Mexico Canada and China.Canada. We own (i) a 96-room motel located near our Omaha headquarters; (ii) an 85-room hotel located near our Atlanta terminal; (iii) a 71-room private driver lodging facility at our Dallas terminal; (iv) six operational facilities located in Ohio, Indiana, Pennsylvania and (iv)Florida; and (v) a terminal facility in Queretaro, Mexico, which we lease to a third party. The Werner Fleet Sales network has eightseven locations, which are primarily located in certain terminals listed above. Our driver training schools operate in 1423 locations in the United States, eitherfour of which are located in or near certain terminals listed above, orfive are located in company-owned facilities, and 14 are located in leased facilities.

The following table summarizes ourNo shares of common stock repurchaseswere repurchased during fourth quarter 2020 made pursuant to this authorization. The Company did not purchase any shares during fourth quarter 2020 other than pursuant to this authorization. All stock repurchases were made2023 by either the Company or on its behalf and not by any “affiliated purchaser”,purchaser,” as defined by Rule 10b-18 of the Exchange Act.

Revenues for our TTS segment operating units (Dedicated and One-Way Truckload) are typically generated on a per-mile basis and also include revenues such as stop charges, loading and unloading charges, equipment detention charges and equipment repositioning charges. To mitigate our risk to fuel price increases, we recover from our customers additional fuel surcharge revenues from our customers that generally recoup a majority of the increased fuel costs; however, we cannot assure that current recovery levels will continue in future periods. Because fuel surcharge revenues fluctuate in response to changes in fuel costs, we identify them separately and exclude them from the statistical calculations to provide a more meaningful comparison between periods. The key statistics used to evaluate trucking revenues, net of fuel surcharge, are (i) average revenues per tractor per week, (ii) average percentage of empty miles (miles without trailer cargo), (iii) average trip length (in loaded miles) and (iv) average number of tractors in service. General economic conditions, seasonal trucking industry freight patterns and industry capacity are important factors that impact these statistics. Our TTS segment also generates a small amount of revenues categorized as non-trucking revenues, which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where the TTS segment utilizes a third-party capacity provider. We exclude such revenues from the statistical calculations.

The operating ratio is a common industry measure used to evaluate our profitability and that of our TTS segment operating fleets. The operating ratio consists of operating expenses expressed as a percentage of operating revenues. The most significant variable expenses that impact the TTS segment are driver salaries and benefits, fuel, fuel taxes (included in taxes and licenses expense), payments to independent contractors (included in rent and purchased transportation expense), supplies and maintenance and insurance and claims. As discussed further in the comparison of operating results for 20202023 to 2019,2022, several industry-wide issues have caused, and could continue to cause, costs to increase in future periods. These issues include shortages of drivers or independent contractors, changing fuel prices, changing used truck and trailer pricing, compliance with new or proposed regulations and tightening of the commercial truck liability insurance market. Our main fixed costs include depreciation expense for tractors and trailers and equipment licensing fees (included in taxes and licenses expense). The TTS segment requires substantial cash expenditures for tractor and trailer purchases. We fund these purchases with net cash from operations and financing available under our existing credit facilities,facility, as management deems necessary.

We provide non-trucking services primarily through the fourthree operating units within our Werner Logistics segment (Truckload Logistics, Intermodal, WGL and Final Mile). In first quarter 2021, we completed the sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group. WGL had annual revenues of $53 million in 2020, and we realized a $1.0 million gain from the sale in first quarter 2021, which assumed achievement of the full earnout. At the end of the twelve-month period following the completed sale of WGL, the full earnout was achieved. Unlike our TTS segment, the Werner Logistics segment is less asset-intensive and is instead dependent upon qualified associates, information systems and qualified third-party capacity providers. The largest expense item related to the Werner Logistics segment is the cost of purchased transportation we pay to third-party capacity providers. This expense item is recorded as rent and purchased transportation expense. Other operating expenses consist primarily of salaries, wages and benefits.benefits, as well as depreciation and amortization, supplies and maintenance, and other general expenses. We evaluate the Werner Logistics segment’s financial performance by reviewing the gross margin percentage (revenues less rentoperating expenses and purchased transportation expensesoperating income expressed as a percentage of revenues) and the operating income percentage. The gross marginrevenues. Purchased transportation expenses as a percentage of revenues can be impacted by the rates charged to customers and the costs of securing third-party capacity. We have a mix of contracted long-term rates and variable rates for the cost of third-party capacity, and we cannot assure that our operating results will not be adversely impacted in the future if our ability to obtain qualified third-party capacity providers changes or the rates of such providers increase.

The following tables set forth the operating revenues, operating expenses and operating income for the TTS segment and certain statistical data regarding our TTS segment operations, as well as statistical data for the One-Way Truckload and Dedicated operating units within TTS.

The following tables set forth the Werner Logistics segment’s revenues, rent and purchased transportation expense, gross margin, other operating expenses (primarily salaries, wages and benefits expense), total operating expenses, and operating income, as well as certain statistical data regarding the Werner Logistics segment.

DuringDedicated continues to experience steady demand from the first two monthsmajority of 2020,our long-term customers, and our Dedicated pipeline of new opportunities remains healthy. In 2024, we expect freight demand to remain steady in ourDedicated and be seasonally weaker for One-Way Truckload fleet was seasonally normal and slightly belowWerner Logistics early in the same periodyear, and then improve in 2019. We experienced short-lived strengthened demand immediately following the COVID-19 pandemic declaration by WHO on March 11, which weakened in early second quarter 2020 due to some customers temporarily closing or significantly curtailing their businesses. In the second half of 2020, after businesses beganthe year, as capacity exits the market and retail inventory replenishments reset to reopen, freight demand was strong and improved throughout the period. In our Dedicated fleet, freight demand was strong throughout 2020, as approximately three-quarters of our Dedicated revenues are with essential products customers. Freight demand in One-Way Truckload has continued to be stronger than normal so far in 2021.normalized levels.

Trucking revenues, net of fuel surcharge, increased 0.9%decreased 1.7% in 20202023 compared to 20192022 due to a 3.7% increase1.3% decrease in the average number of tractors in service and a 0.4% decrease in average revenues per tractor per week, net of fuel surcharge. During 2023, One-Way Truckload average revenues per total mile, net of fuel surcharge, partially offsetdecreased 5.5%, as One-Way Truckload was challenged by a 2.7% decreaseelevated transactional spot rate exposure and pricing pressure. We expect ongoing pricing pressure for One-Way Truckload during the early part of 2024, then moderating later in the average number of tractors in service. We attribute the increase inyear. Dedicated average revenues per tractor per week, to higher average revenues per total mile. The increase in average revenues per total mile was due to relative strength in Dedicated pricing and a stronger than expected peak season fornet of fuel surcharge, increased 1.5%. Considering the One-Way Truckload fleet. We currentlyfreight market outlook, we expect average revenues per total mile, net of fuel surcharge, for the One-Way Truckload fleet to remain strong fordecrease in a range of 6% to 3% in the first half of 2021 and to increase in a range of 7% to 10%2024 when compared to the first half of 2020,2023, and we expect Dedicated average revenues per trucktractor per week, net of fuel surcharge, to remain flat or increase up to 3% in a range of 3% to 5% in the first half of 20212024 compared to the first half of 2020.2023.

The average number of tractors in service in the TTS segment decreased 2.7%1.3% to 7,7578,326 in 20202023 compared to 7,9698,437 in 2019.2022, as we decreased our fleet size to adjust to the challenging freight market conditions. We ended 20202023 with 7,8308,000 tractors in the TTS segment, a year-over-year decrease of 170 trucks. The decrease in the average number of tractors in service was anticipated during the early stages of COVID-19 as (i) we aligned our fleet to adjust to reduced demand, (ii) we had delayed implementations of Dedicated fleet start-ups, and (iii) we expected lower numbers of students at driving schools due to COVID-19 social distancing requirements and state licensing cutbacks, which limits the number of placement drivers entering our career track program. Our number of tractors in service increased during the second half of 2020 as (i) demand strengthened, (ii) Dedicated fleets were implemented, and (iii) driving schools adapted to operations during the pandemic.600 tractors. Our Dedicated unit ended 20202023 with 4,945 trucks5,265 tractors (or 63%66% of our total TTS segment fleet) compared to 4,630 trucks5,450 tractors (or 63%) at the end of 2019.2022. We currently expect our fleet size at the end of 20212024 to be in a range of a 1%remain flat or decrease up to 3% higher when compared to the fleet size at year-end 2020.the end of 2023, with potential for growth in our Dedicated unit in the second half of the year. We cannot predict whether future driver shortages, if any, will adversely affect our ability to maintain our fleet size. If such a driver market shortage were to occur, it could result in a fleet size reduction, and our results of operations could be adversely affected.

Trucking fuel surcharge revenues decreased 32.3%20.7% to $158.6$332.4 million in 20202023 from $234.4$419.2 million in 2019 because of2022 due primarily to lower average diesel fuel prices in 2020.prices. These revenues represent collections from customers for the increase in fuel and fuel-related expenses, including the fuel component of our independent contractor cost (recorded as rent and purchased transportation expense) and fuel taxes (recorded in taxes and licenses expense), when diesel fuel prices rise. Conversely, when fuel prices decrease, fuel surcharge revenues decrease. To lessen the effect of fluctuating fuel prices on our margins, we collect fuel

remaining portion is generally not recoverable because it results from empty and out-of-route miles (which are not billable to customers) and trucktractor idle time. Fuel prices that change rapidly in short time periods also impact our recovery because the surcharge rate in most programs only changes once per week.

Werner Logistics revenues are generated by its fourthree operating units andunits. Werner Logistics revenues exclude revenues for full truckload shipments transferred to the TTS segment, which are recorded as trucking revenues by the TTS segment. Werner Logistics also recorded revenue and brokered freight expense of $0.1$17.7 million in 20202023 and $0.2$5.2 million in 20192022 for Intermodal drayage movementsshipments performed by the TTS segment (also recorded as trucking revenuesrevenue by the TTS segment), and these transactions between reporting segments are eliminated in consolidation. Werner Logistics revenues decreased 4.1%increased 14.7% to $469.8$910.4 million in 20202023 from $489.7$793.5 million in 20192022 primarily due primarily to lowergrowth from the November 2022 ReedTMS acquisition. Truckload Logistics revenues (61%(77% of total logistics revenues). The Werner Logistics gross margin dollarsrevenues) increased 32% driven by an increase in shipments due to the ReedTMS acquisition, partially offset by a decline in revenue per shipment. Intermodal revenues (12% of total Werner Logistics revenues) decreased 20.1%38% due to $62.5a decline in shipments and lower revenue per shipment. Final Mile revenues (11% of total Werner Logistics revenues) increased $11.0 million, or 12%, despite a softer market for discretionary spending on big and bulky products. Werner Logistics operating income decreased to $15.9 million in 20202023 from $78.2$36.2 million in 2019,2022 and the Werner Logistics grossoperating margin percentage decreased to 13.3%1.7% in 20202023 from 16.0%4.6% in 2019. The2022, due to a competitive pricing environment. In 2024, we expect Truckload Logistics margins will remain challenged in the near term, but may improve later in the year from further synergies realized from the integration of our acquired companies. We also expect to continue to generate double-digit revenue growth in Werner Logistics operating income percentage decreased to 1.3% in 2020 from 3.3% in 2019, as the percentage decline in gross profit exceeded the percentage decline in other operating expenses. The gross margin decrease was due primarily2024, while getting back to a softer freight market in the first half of 2020 and the unprecedented large and rapid rise in spot truckload rates in the second half of 2020 which significantly increased the cost of capacity for contractual brokerage shipments. During third quarter 2020, we addressed customer pricing for many of our contractual brokerage accounts, which resulted in sequential improvement from third quarter 2020 to fourth quarter 2020 in both our grossmid-single digit operating margin percentage and operating margin percentage.entering into 2025.

Salaries, wages and benefits decreased $22.6increased $51.9 million or 2.8%5.1% in 20202023 compared to 20192022 and increased 0.4%1.7% as a percentage of operating revenues. The lowerhigher dollar amount of salaries, wages and benefits expense in 20202023 was due primarily to lower fringe benefits and having fewer placement drivers, both of which were impacted by COVID-19. Our workers’ compensation costs improved, and we incurred lower group health insurance costs which we believe is a temporary effect of COVID-19. These decreases were partially offset byincreased non-driver pay, higher driver pay ratesfrom 3.4 million more company tractor miles, and higher benefit costs. The increase in 2020.non-driver pay was primarily due to a larger average number of non-driver employees, including the impact from our ReedTMS and Baylor acquisitions. Non-driver salaries, wages and benefits in our non-trucking Werner Logistics segment decreased 11.6% from 2020 to 2019.increased 37.2%, primarily as a result of the ReedTMS acquisition.

We renewed our workers’ compensation insurance coverage on April 1, 2020 and assumed additional risk exposure by increasing our2023. Our coverage levels are the same as the prior policy year. We continue to maintain a self-insurance retention from $1.0 million toof $2.0 million per claim as of April 1, 2020. As a result of the higher self-insured retention, ourclaim. Our workers’ compensation insurance premiums for the policy year beginning April 2020 are $0.8 million lower than the premiums for2023 were flat compared to the previous policy year.

TheWhile we currently believe the driver recruiting and retention market may be less difficult in the near term, a competitive driver recruiting market further intensified throughout 2020, aspresents labor challenges for customers and carriers alike. Several factors impacting the improving freightdriver market in the second half of the year caused increased competition for the finite number of experienced drivers that meet our hiring standards. Several ongoing market factors persisted includinginclude a declining number of, and increased competition for, driver training school graduates, particularly considering COVID-19 constraints, aging truck driver demographics and increased truck safety regulations. We continuedcontinue to take significant actions to strengthen our driver recruiting and retention as we strive to make Werner a preferredbe the truckload employer of choice, for the best drivers, including raisingcompetitive driver pay, maintainingproviding a new truckmodern tractor and trailer fleet purchasing best-in-classwith the latest safety features for all new trucks,equipment and technology, investing in our driver training school network and collaborating with customers to improve or eliminate unproductive freight. These efforts continued to have positive results on our driver retention. In January 2021, we implemented driver pay increasesoffering a wide variety of approximately $10 million annually in our One-Way Truckload fleet,driving positions including daily and we are implementing pay increases as needed in Dedicated. We expect our total TTS driver pay increases to total $16 million to $18 million in 2021.weekly home time opportunities. We are unable to predict whether we will experience future driver shortages or maintain our current driver retention rates. If such a driver shortage were to occur and additional driver pay rate increases became necessary to attract and retain drivers, our results of operations would be negatively impacted to the extent that we could not obtain corresponding freight rate increases.

We continue to employ measures to improve our fuel mpg such as (i) limiting trucktractor engine idle time by installing auxiliary power units, (ii) optimizing the speed, weight and specifications of our equipment and (iii) implementing mpg-enhancing equipment changes to our fleet including new trucks,tractors, more aerodynamic trucktractor features, idle reduction systems, trailer tire inflation systems, trailer skirts and automated manual transmissions to reduce our fuel gallons purchased. However, fuel savings from mpg improvement is partially offset by higher depreciation expense and the additional cost of diesel exhaust fluid. Although our fuel management programs require significant capital investment and research and development, we intend to continue these and other environmentally conscious initiatives, including our active participation as ana U.S. EPA SmartWay

Transport Partner. The SmartWay Transport Partnership is a national voluntary program developed by the EPA and freight industry representatives to reduce greenhouse gases and air pollution and promote cleaner, more efficient ground freight transportation.

Shortages of fuel, increases in fuel prices and petroleum product rationing can have a material adverse effect on our operations and profitability. We are unable to predict whether fuel price levels will increase or decrease in the future or the extent to which fuel surcharges will be collected from customers. As of December 31, 2020,2023, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

Supplies and maintenance decreased $7.1increased $3.4 million or 3.9%1.3% in 20202023 compared to 20192022 and was flatincreased 0.1% as a percentage of operating revenues. The lower dollar amount of suppliesSupplies and maintenance expense wasincreased due primarily to lower travelhigher costs for over-the-road repairs and entertainment costs resulting from COVID-19 restrictions, as well as lower driverthe impact of 3.4 million more company tractor miles in 2023. We have taken steps to reduce repair and placement driver-related expenses.maintenance expense by growing our in-house maintenance capabilities throughout our terminal network. We are also developing digital solutions to further optimize the routing and scheduling of tractors and trailers for preventive maintenance.

Insurance and claims increased $20.9decreased $8.8 million or 23.5%6.0% in 20202023 compared to 20192022 and increased 1.0%decreased 0.3% as a percentage of operating revenues, due primarily to lower expense for large dollar liability claims resulting from a lower amount of unfavorable reserve development and lower new claims, partially offset by higher expense for new largesmall dollar liability claims, increasing cost-per-claim, and increased cost for repairs. The majority of the higher liability insurance premiumsunfavorable reserve development in 2022 related to unexpected and unfortunate legal developments for two prior year motor vehicle accidents that have been settled, including a settlement of $3.8 million. In Januarya lawsuit in Texas arising from a May 24, 2020 one of our trucks was involved in a serious accident. We self-insureaccident for the first $10.0 million of liability coverage for this policy period, and have appropriate excess liability coverage with insurance carriers above that amount. As a result,which we recorded $10.0recognized $9.5 million of insurance and claims expense in 2020 for this accident.2022. We also incurred insurance and claims expense of $4.9$5.7 million and $5.4 million in 20202023 and $3.9 million in 20192022, respectively, for accrued interest related to a previously-disclosed adverse jury verdict rendered on May 17, 2018, which we are appealing (see Note 912 in the Notes to Consolidated Financial Statements set forth in Part II of this Form 10-K). Interest is accrued at $0.4 million per month,will continue to accrue monthly until such time as the outcome of our appeal is finalized, excluding the months of June and July 2019 when the plaintiffs requested an extension of time to respond to our appeal.finalized. The majority of our insurance and claims expense results from our claim experience and claim development under our self-insurance program; the remainder results from insurance premiums for claims in excess of our self-insured limits. In 2023, we achieved our lowest DOT preventable accident rate per million miles in the last 19 years.

We renewed our liability insurance policies on August 1, 20202023 and are now responsible for the first $10.0 million per claim on all claims with noan annual aggregates.$12.5 million aggregate for claims between $10.0 million and $20.0 million. For the policy year that began August 1, 2019,2022 we were responsible for the first $3.0$10.0 million per claim on all claims with an annual $6.0$10.0 million aggregate for claims between $3.0$10.0 million and $5.0 million and an additional $5.0 million deductible per claim for each claim between $5.0 million and $10.0$20.0 million. We maintain liability insurance coverage with insurance carriers in excess of the $10.0 million per claim. Our liability insurance premiums for the policy year that began August 1, 20202023 are $7.8$1.0 million higher than premiums for the previous policy year.

Depreciation and amortization expense increased $13.8$19.6 million or 5.5%7.0% in 20202023 compared to 20192022 and increased 1.0%0.6% as a percentage of operating revenues. During first quarter 2020, we changed the estimated life of certain trucks expected to be sold in 2020 to more rapidly depreciate these trucks to their estimated residual valuesrevenues due to the weak used truck market. These trucks continued to depreciate at the same higher rate per truck until the trucks were sold. The effect of this change in accounting estimate increased 2020 depreciation expense by $9.6 million. Information technology and communication infrastructure upgrades also addedprimarily to the higher cost of new tractors and trailers, a larger company trailer fleet, and depreciation expenseand amortization on tangible and intangible assets recorded in 2020.the ReedTMS and Baylor acquisitions.

The average age of our trucktractor fleet remains low by industry standards and was 2.02.1 years as of December 31, 2020,2023, and the average age of our trailers was 4.04.9 years. We continued to invest in new truckstractors and trailers and our terminals in 20202023 to improve our driver experience, increase operational efficiency and more effectively manage our maintenance, safety and fuel costs. We currently intend to maintainIn 2024, we expect the average age of our trucktractor and trailer fleetfleets to remain at or near current levels.

Rent and purchased transportation expense decreased $30.3increased $108.8 million or 5.5%14.0% in 20202023 compared to 20192022 and decreased 0.4%increased 3.4% as a percentage of operating revenues. Rent and purchased transportation expense consists mostly of payments to third-party capacity providers in the Werner Logistics segment and other non-trucking operations, and payments to independent contractors in the TTS segment.segment, and cloud-based technology fees. The payments to third-party capacity providers generally vary depending on changes in the volume of

Rent and purchased transportation expense for the TTS segment decreased $26.1increased $10.6 million in 20202023 compared to 2019. This decrease is2022 due primarily to an increase in cloud-based technology fees and more independent contactor miles in 2023, partially offset by lower payments

reimbursements to independent contractors in 2020 compared to 2019, resulting from 15.1 million fewer independent contractor miles driven in 2020. Lowerbecause of lower average diesel fuel prices in 2020 also resulted in a lower per-mile settlement rate for independent contractors.prices. Independent contractor miles increased 1.3 million miles in 2023 and as a percentage of total miles were 8.3%4.6% in 2020 and 9.9%2023 compared to 4.5% in 2019.2022. Because independent contractors supply their own tractors and drivers and are responsible for their operating expenses, the decreaseincrease in independent contractor miles as a percentage of total miles shifted costs from the rent and purchased transportation category to other expense categories, including (i) salaries, wages and benefits, (ii) fuel, (iii) depreciation, (iv) supplies and maintenance and (v) taxes and licenses.licenses to the rent and purchased transportation category.

Challenging operating conditions continue to make independent contractor recruitment and retention difficult. Such conditions include inflationary cost increases that are the responsibility of independent contractors and a shortage of financing available to independent contractors for equipment purchases. Historically, we have been able to add company tractors and recruit additional company drivers to offset any decrease in the number of independent contractors. If a shortage of independent contractors and company drivers occurs, furtherwere to occur, increases in per-mile settlement rates (for independent contractors) and driver pay rates (for company drivers) may become necessary to attract and retain these drivers. ThisThese increased expenses could negatively affect our results of operations to the extent that we would not be able to obtain corresponding freight rate increases.

Other operating expenses increased $11.2$50.2 million in 20202023 compared to 20192022 and increased 0.5%1.5% as a percentage of operating revenues.revenues due primarily to lower gains on sales of property and equipment (primarily used tractors and trailers), and increased costs associated with professional technology services related to our multi-year technology and innovation strategy. Gains on sales of assets (primarily used trucksproperty and trailers)equipment are reflected as a reduction of other operating expenses and are reported net of sales-related expenses (which include costs to prepare the equipment for sale). Gains on sales of assetsproperty and equipment were $11.3$42.4 million in 2020,2023, compared to $21.6$88.6 million in 2019, including $3.4 million from sales of real estate in 2019.2022. In 2020,2023, we sold significantly more truckstractors and fewer trailers than in 2019. We2022 and realized significantlysubstantially lower average gains per trucktractor and slightlytrailer due to lower average gains per trailer sold in 2020 compared to 2019. We experienced low demand for our used equipment in the first half of 2020. Pricingpricing in the market for our used trucks beganequipment, which we believe is due to improvedecreased demand for our used equipment because of carriers increasingly exiting the trucking industry in third quarter 20202023 due to the challenging freight market and an increase in the availability of new equipment due to fewer production delays in 2023 compared to 2022. For the used tractor and trailer market, we expect continued to improvelow demand with moderating pricing and equipment gains through the endfirst half of 2020. We currently2024. As a result, we expect our gains on sales of property and equipment in 20212024 to improvedecrease to between $10 million and to be in the range of $12 million to $15$30 million. Increased costs associated with software consultant services also contributed to the increase in other operating expenses from 2019 to 2020.

Management believes our financial position at December 31, 2020,2023 is strong. As of December 31, 2023, we had $61.7 million of cash and cash equivalents and over $1.5 billion of stockholders’ equity. Cash is invested primarily in short-term money market funds. In addition, we have a $1.075 billion credit facility, for which our total available borrowing capacity was $463.9 million as of December 31, 2023. After considering recent developments in the banking sector, we believe the six commercial banks in our $1.075 billion syndicated credit facility all have strong tier-one capital ratios and good loan-to-deposit ratios. We believe our liquid assets, cash generated from operating activities, and borrowing capacity under our existing credit facility will provide sufficient funds to meet our cash requirements and our planned shareholder returns for the foreseeable future.

Net cash used in investing activities decreased to $263.3was $434.9 million during 2020 from $272.32023 compared to $514.3 million during 2019.2022. Net cash invested in our business acquisitions was $0.2 million during 2023 compared to $184.1 million during 2022. Net property and equipment additions (primarily revenue equipment) were $266.2$408.7 million for the year ended December 31, 2020,during 2023 compared to $283.9$317.6 million during the same period of 2019.2022. We currently estimate net capital expenditures (primarily revenue equipment) in 20212024 to be in the range of $275$260 million to $300$310 million. We intend to fund these net capital expenditures through cash flowflows from operations and financing available under our existing credit facilities,facility, if necessary. AsWe also purchased a $25.0 million subordinated promissory note from Mastery Logistics Systems, Inc. on January 24, 2023, with a maturity date of December 31, 2020, we were committedJanuary 24, 2030 (see Note 9 in the Notes to property and equipment purchasesConsolidated Financial Statements under Item 8 of approximately $131.3 million.Part II of this Form 10-K for information regarding our notes receivable).

Net financing activities used $186.0$87.1 million in 2020during 2023 and used $155.2provided $118.0 million in 2019. During the year ended December 31, 2020, we borrowed $40.0during 2022. We had net repayments on our debt of $45.0 million of short-termduring 2023, decreasing our outstanding debt and repaid $140.0to $648.8 million of debt. Our outstanding debt at December 31, 2020 totaled $200.0 million. During 2019, we borrowed $275.02023. We had net borrowings on our debt of $266.3 million during 2022, which a portion of the proceeds were used to finance our Baylor and repaid $100.0 million of long-term debt.ReedTMS acquisitions. We paid dividends of $24.9$34.2 million during 2023 and $32.2 million during 2022. We increased our quarterly dividend rate by $0.01 per share, or 8%, beginning with the quarterly dividend paid in 2020July 2023, and $286.2 millionwe increased our quarterly dividend rate by $0.01 per share, or 8%, beginning with the dividend paid in 2019, includingJuly 2022.

On November 9, 2021, our Board of Directors approved a stock repurchase program under which the $261.1 million ($3.75 per share) special dividendCompany is authorized to repurchase up to 6,000,000 shares of its common stock. We did not repurchase any shares of common stock in 2019 and quarterly dividends in both years.

2023, the Company had purchased 3,688,190 shares were repurchased in 2019 at a cost of $42.3 million.pursuant to this authorization and had 2,311,810 shares remaining available for repurchase. The Company has repurchased, and may continue to repurchase, shares of the Company’s common stock. The timing and amount of such purchases dependsdepend upon economic and stock market conditions and other factors. On May 14, 2019, the Board of Directors approved a new stock repurchase program under which the Company is authorized to repurchase up to 5,000,000 shares of its common stock. As of December 31, 2020, the Company had purchased 2,182,992 shares pursuant to the new authorization and had 2,817,008 shares remaining available for repurchase.

Estimates of accrued liabilities for insurance and claims for bodily injury and property damage and workers’ compensation is a critical accounting estimate that requires us to make significant judgments and estimates and affects our financial statements. The accruals for bodily injury and property damage and workers’ compensation (current and non-current) are recorded at the estimated ultimate payment amounts and are based upon individual case estimates and actuarial estimates of loss development for reported losses and incurred-but-not-reported losses using loss development factors based upon past experience. In order to determine the loss development factors, we make judgments relating to the comparability of historical claims to current claims. These judgments consider the nature, frequency, severity, and age of claims, and industry, regulatory, and company-specific trends impacting the development of claims. An independent actuary reviews our calculation of the undiscounted self-insurance reserves for bodily injury and property damage claims and workers’ compensation claims at year-end. The actual cost to settle our self-insured claim liabilities can differ from our reserve estimates because of a number of uncertainties, including the inherent difficulty in estimating the severity of a claim and the potential amount to defend and settle a claim.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.