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USA TRUCK INC.

TABLE OF CONTENTS

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Part I.

Cautionary Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K for the year ended December 31, 20202021 (this “Form 10-K”) contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and such statements are subject to the safe harbor created by those sections, and the Private Securities Litigation Reform Act of 1995, as amended.  All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation:

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In this Form 10-K, statements relating to:

among others, are forward-looking statements.  Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “focus,” “intends,” “plans,” “goals,” “may,” “if,” “will,” “would,” “should,” “could,” “potential,” “continue,” “designed,” “likely,” “foresee,” “seek,” “target,” “forecast,” “intends,” “hopes,” “strategy,” “objective,” “mission,” “outlook,” “future” and similar terms and phrases.  Forward-looking statements are based on currently available operating, financial, and competitive information.  Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Item 1A, Risk Factors.”  Readers should review and consider the factors discussed under the heading “Risk Factors” in Item 1A of this Form 10-K, along with various disclosures in our press releases, stockholder reports, and other filings with the SEC.

All such forward-looking statements speak only as of the date of this Form 10-K.  You are cautioned not to place undue reliance on such forward-looking statements.  We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in the events, conditions, or circumstances on which any such information is based, except as required by law.

All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement.

References to the “Company,” “we,” “us,” “our,” and words of similar import refer to USA Truck Inc., and its subsidiaries.

Risk Factor Summary

Investing in our common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as fully described below.  These factorsuncertainties.  This summary briefly states the principal risks and uncertainties that make investingfacing our business.  A complete statement of such risks and uncertainties is set forth in our common stock risky include, among others:“Risk Factors” in Item 1A of this Form 10-K.  You are encouraged to carefully read the entire “Risk Factors” section.

Operational and Strategic Risks

Regulatory and Compliance Risks

Financial Risks

General Risks

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The Company has two reportable segments: (i) Trucking, consisting of the Company’s truckload and dedicated freight service offerings, and (ii) USAT Logistics, consisting of the Company’s freight brokerage, logistics, and rail intermodal service offerings.  Our truckload service offering provides motor carrier services as a medium-haul common and contract carrier, utilizing equipment owned or leased by the Company or independent contractors.  Our dedicated freight service offering provides truckload motor carrier services to specific customers for movement of freight over particular routes at specified times.  USAT Logistics provides freight brokerage, logistics, and intermodal rail service to its customers by utilizing third party capacity.  Each of these service offerings match customer shipments with available equipment of authorized third-party motor carriers and other service providers.  The Company provides these services to many existing Trucking customers, many of whom prefer to rely on a single service provider, or a small group of service providers, to provide all their transportation solutions.

As of December 31, 2020,2021, our corporate structure included USA Truck Inc., and its wholly owned subsidiaries:  International Freight Services, Inc. (“IFS”), a Delaware corporation; USA Truck, LLC, a Delaware limited liability company; USA Truck Fleetco, LLC, a Delaware limited liability company; USA Truck Logistics, LLC, a Delaware limited liability company; Skyraider Risk Retention Group Inc. (“SRRG”), a South Carolina corporation; Davis Transfer Company Inc. (“DTC”), a Georgia corporation; Davis Transfer Logistics Inc. (“DTL”), a Georgia corporation; and B & G Leasing, L.L.C. (“B & G”), a Georgia limited liability company.  Collectively, DTC, DTL, and B & G comprise “Davis Transfer Company”.

Operations

USA Truck is headquartered in Van Buren, Arkansas.  The Company transports freight throughout the contiguous United States, into and out of portions of Canada, and into and out of Mexico by offering through-trailer service from our terminal in Laredo, Texas.  During 20202021 and 2019,2020, the Company generated approximately 6%5% and 7%6%, respectively, of the Company’s operating revenues in Mexico and Canada.  All Company-owned tractors are domiciled in the United States.  The Company does not separately track domestic and foreign long-lived assets, as substantially all of the Company’s long-lived assets are located within the United States.

The Company’s Trucking segment operations are supported primarily by driver managers, load planners and customer service representatives.  Driver managers lead teams of professional drivers and are the primary Company contact for each of our driver team members.  Load planners assign loads to available tractors in a manner intended to maximize profit and minimize costs.  Customer service representatives work to fulfill shippers’ needs, solicit freight, and ensure on-time delivery by monitoring load movement.  These teams monitor the location of equipment and direct its movement in a safe, efficient and practicable manner.  The Company strives to operate a safe and productive fleet while providing superior customer service.

The USAT Logistics segment has a network of regional sales offices located throughout the continental United States.  We believe that regionalization allows greater market insight and strengthens relationships with customers and carriers alike while capitalizing on the skills and local market insight of the leaders managing these centers.  The specific locations of branch offices are selected for the availability of talent and freight in those markets.

The Company has a diversified freight and customer base, and focuses marketing efforts on customers who have consistent shipping needs within the eastern half of the United States, which is the predominant operating area for our Trucking operations.  USAT Logistics offers services nationwide, and the cross-marketing of service offerings permits us to strategically position available equipment while providing a full array of supply chain transportation solutions to our customers.  USA Truck team members have cultivated a thorough understanding of the needs of shippers in key industries, which the Company believes helps with the development of long-term, service-oriented relationships with its customers.  

Revenue Equipment

The average age of the Company’s in-service tractor fleet was approximately 29 months2.9 years at December 31, 2021 compared to 2.4 years at December 31, 2020.  The increased age of the Company-owned fleet was due to delays in receiving new tractors in 2021 which led to longer than anticipated utilization in the Company-owned fleet.

The Company’s equipment purchase and replacement decisions are based on a number of factors, including, but not limited to, new equipment prices and availability, the used equipment market, trade-in values, demand for freight services, prevailing interest rates, the attractiveness of lease terms, technological improvements, regulatory changes, fuel efficiency, equipment durability, equipment specifications and driver comfort.  Therefore, depending on the circumstances, the Company may accelerate or delay the acquisition and disposition of its tractors or trailers from time to time, or may choose to acquire revenue equipment through operating leases or financed purchases.time.

To simplify driver and mechanic training, control the cost of spare parts and tire inventory, and provide for a more efficient vehicle maintenance program, the Company purchases tractors and trailers manufactured to its specifications.  The Companyspecifications, and has in place a preventive maintenance program intendedwhich aims to minimize equipment downtime and maintenance costs.

We equip our tractors with satellite-based tracking devices and communications technology that permits direct communication between drivers and fleet managers.  We believe that this system enhances our operating efficiency and improves customer service and fleet management.  We also use the system to monitor engine idling time, speed, performance, and other factors that affect operating efficiency.  At December 31, 2021, all of our tractors were equipped with electronic logging devices (“ELDs”), which electronically monitor tractor miles and facilitate enforcement of hours-of-service regulations, both forward - and inward facing event recorders, and forward collision mitigation.

The Company finances the purchase of revenue equipment through its cash flows from operations, our revolving credit agreement, finance and operating lease arrangements and proceeds from sales of used equipment.  Substantially all of the Company’s tractors and trailers are pledged to secure its obligations under financing arrangements.

All Company and independent contractor tractors are equipped with in-cab communication technology, enabling two-way communications between the Company and its drivers, through both standardized and free-form messaging, including electronic logging.  The Company also has installed electronic logging devices (“ELDs”) on 100% of its tractor​

fleet.  This technology enables USA Truck to dispatch drivers efficiently in response to customers’ requests, to provide real-time information to customers about the status of their shipments and to provide documentation supporting accessorial charges.  Accessorial charges are charges to customers for additional services such as loading, unloading and detainment or equipment delays.  In addition, the Company utilizes satellite-based equipment tracking devices and cargo sensors on the majority of its trailers.  These tracking devices provide the Company with visibility on the locations and load status of its trailers.  The Company has also equipped the Company’s tractor fleet with forward-facing and in-ward facing event recorders.

Human Capital Resources

As of December 31, 2020,2021, the Company had approximately 2,0002,100 team members, across all business segments, of which approximately 67%66% were Company drivers.  The Company believes team member relations to be good, and no team members are subject to union contracts or are part of a collective bargaining unit.  

Recruitment, training, and retention of a professional driver workforce the Company’s most valuable asset, are essential to the Company’s continued growth and fulfillment of customer needs.  USA TruckThe Company hires qualified professional drivers who hold a valid commercial driver’s license, satisfy applicable federal and state safety performance and measurement requirements, and meet USA Truck’sour hiring criteria.  These guidelines relate primarily to safety history, road test evaluations, and various other evaluations, which include physical examinations and mandatory drug and alcohol testing.  In order to attract and retain safe drivers who are committed to safety and customer service, and safety, the Company focuses its driver operations around a collaborative and supportive team environment.  The Company provides comfortable, late model equipment, encourages direct communication with senior management, and pays competitive wages and benefits, and provides other incentives intended to encourage driver safety, retention, and long-term employment.  The majority of our professional drivers are compensated on a per mile basis, based on the length of haul and a predetermined number of miles.basis.  Drivers are also compensated for accessorial services provided to customers.  Drivers and other employees are encouraged to participate in the Company’s 401(k) program,plan, Company-sponsored health, life, and dental plans, and the Company’s employee stock purchase plan.  The Company believes these factors aid in attracting, recruiting, and retaining professional drivers in a competitive driver market.

The Company is committed to hiring, developing and supporting a diverse and inclusive workplace.  Our management team and all of our employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace.  All of our non-driver employees are required to complete annual trainings on our Code of Conduct, harassment, bullying and sexual harassment, unconscious bias and emotional intelligence.  Additionally, the Company sponsors diversity and inclusion programs periodically throughout the year to promote awareness of different cultures and backgrounds.  In 2021, the Company released its first Environmental, Social and Governance (“ESG”) report, which presented the Company’s approach to sustainability, environmental stewardship, corporate governance, and its social impact.  

DuringBeginning in 2020, in response to the COVID-19 pandemic, we implemented safety protocols and new procedures to protect our employees.  These protocols include complyingcompliance with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.  In addition, we modified the way we conduct many aspects of our business to reduce the number of in-person interactions.  For example, we significantly expanded the use of virtual interactions in all aspects of our business, including customer facing activities.  Many of our administrative and operational functions during this time have required modification as well, including mosta large portion of our workforce working remotely.  For a detailed discussion of the impact of the COVID-19 pandemic, see “Risk Factors” in Item 1A of this Form 10-K.

Independent Contractors

In addition to Company drivers, USA Truck enterswe enter into contracts with independent contractors, who provide a tractor and a driver and are responsibleassume responsibility for all operating expenses in exchange for an agreed upon fee structure.  As of December 31, 2020,2021, the Company had 628641 independent contractor operated tractors, which comprised approximately 30% of the professional driving fleet during 2020, compared to approximately 21% at December 31, 2019.both 2021 and 2020.

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Principal competitive factors in the truckload segment of the industry are customer service, capacity, and price, with rate discounting becoming particularly important during economic downturnsprice.  Most truckload contracts (other than dedicated contracts) do not guarantee truck availability or periods of uncertainty.  USA Truck’sshipment volumes.  Pricing is influenced by supply and demand.  The Company’s focus is to differentiate itself primarily on the basis of service rather than rates.  Although an increase in the size of the market would benefit all truckload carriers, management believes that successful carriers are likely to grow market share by providing multiple service offerings, combined with superior customer service, at a competitive price.service.

Safety and Risk Management

The Company emphasizes safe work habitssafety as athe top core value throughout the entireour organization, and provides proactive training and education relating to safety concepts, processes and procedures.  The Company is compliant by the use ofutilizes the Drug and Alcohol Clearing house to verify that both pre-employment and current drivers qualify to work in the industry.and those seeking employment with us meet eligibility requirements.  The Company conducts pre-employment, random, reasonable suspicion and post-accident alcohol and substance abuse testing in accordance with the U.S. Department of Transportation (“DOT”)DOT regulations and the Company’s own policies.

Safety training for new drivers begins in orientation, when newly hired team members are taught safe driving and work techniques that emphasize the Company’s strong commitment to safety.  Upon completion of orientation, new student drivers are required to undergo on-the-road training for four to six weeks with experienced commercial motor vehicle drivers who have been selected for their professionalism and commitment to safety and who are trained to communicate safe driving techniques to new drivers.  New drivers who graduate from the program must also successfully complete post-training classroom and road testing before being assigned to their own tractor.  Additionally, all Company drivers participate in on-going training that focuses on collision and injury prevention, among other safety concepts.

The primary risks for which the Company is insured are cargo loss and damage, general liability, personal injury, property damage, workers’ compensation and employee medical expenses.  USA Truck is self-insured for a portion of claims exposure in each of these areas.  The Company’s self-insurance retention levels are $0.5 million for workers’ compensation claims per occurrence, $0.05 million for cargo loss and damage claims per occurrence and $2.0 million for bodily injury and property damage claims per occurrence.  Prior to the Company’s most recent insurance renewal on October 1, 2020, the Company’s self-insurance retention level was $1.0 million for bodily injury and property damages claims per occurrence, but through the formation of SRRG the Company retained the exposure from $1.0 million to $2.0 million.  For medical benefits, the Company self-insures up to $0.25 million per plan participant per year with an aggregate claim exposure limit determined by the Company’s year-to-date claims experience and its number of covered team members.  The Company is in the secondthird year of a multi-yearthree year structured insurance agreementagreements with two separate insurers in the $2 million to $10 million layer, locking in capacity and premiums for the policy term.  While there is increased risk, the Company believes the structure of the agreements appropriately allocates the risk between the Company and insurance providers.  The Company maintains insurance above the amounts for which it self-insures, subject to certain limits, with licensed insurance carriers.  The Company has excess general, auto and employer’s liability coverage in amounts substantially exceeding minimum legal requirements.  The Company is completely self-insured for physical damage to its own tractors and trailers, except that the Company carries catastrophic physical damage coverage to protect against natural disasters.

Although the Company believes the aggregate insurance limits should be sufficient to cover reasonably expected claims, it is possible that one or more claims could exceed the Company’s aggregate coverage limits.  An unexpected loss or changing conditions in the insurance market could adversely affect premium levels or result in our inability to find excess coverage in amounts we deem sufficient.  As a result, the Company’s insurance and claims expense could increase, or the Company could raise its self-insured retention or decrease its aggregate coverage limits when its policies are renewed

This rule has, however, faced challenges and delays.  In October 2017, the EPA announced a proposal to repeal the Phase 2 Standards as they relate to gliders (which mix refurbished older components, including transmissions and pre-emission-rule engines, with a new frame, cab, steer axle, wheels, and other standard equipment).  The outcome of such proposed repeal is still undetermined.  Additionally, implementation of the Phase 2 Standards as they relate to trailers has been delayed bychallenged in  the U.S. Court of Appeals for the District of Columbia.  On November 12, 2021, a panel for the U.S. Court of Appeals for the District of Columbia which is overseeing a case againstruled in favor of the EPAassociation challenging the standards and NHTSA by the Truck Trailer Manufacturers Association (“TTMA”) regardingvacated all portions of the Phase 2 Standards that applied to trailers, and consequently, the Phase 2 Standards will only require reductions in emissions and fuel consumption for tractors.  The Company’s new tractor purchases in 2021 complied with the emission and fuel consumption reductions required by the Phase 2 Standards.

Generally, the Company believes these Phase 2 requirementsStandards could result in increased new tractor and trailer prices and additional parts and maintenance costs required to retrofit its tractors and trailers with technology to achieve compliance with such standards, which could adversely affect its operating results and profitability, particularly if such costs are not offset by potential fuel savings.  The Company cannot predict, however, the extent to which its operations and productivity will be impacted.  

The California Air Resources Board (“CARB”) also adopted emission control regulations that will apply to all heavy-duty tractors that pull 53-foot or longer box-type trailers within the State of California regardless of the state of origin.  The tractors and trailers subject to these CARB regulations must be either EPA SmartWay certified or equipped with low-rolling resistance tires and retrofitted with SmartWay-approved aerodynamic technologies.  The Company currently purchases SmartWay certified equipment in its new tractor and trailer acquisitions.  In addition, in February 2017 CARB proposed additional phasePhase 2 standardsStandards that generally align with the federal Phase 2 standardsStandards with respect to model years 2018 to 2021 tractors, with some minor additional requirements.  As proposed, the enhanced California standards would stay in place even if the federal standards are vacated or otherwise diminished due to legislative or executive action.  In February 2019, the California Phase 2 standardsStandards became final.  However, in December 2019, due to continuing uncertainty surrounding the federal rules on which the California standards are based, including the TTMATruck Trailer Manufacturer’s Association (“TTMA”) litigation and EPA inaction, CARB suspended enforcement of these standards for at least two years.  In June 2020 CARB has also recentlypassed the Advanced Clean Trucks (“ACT”) regulation, which became effective in March 2021 and generally requires original equipment manufacturers to begin shifting towards greater production of zero-emission heavy duty tractors starting in 2024. Under ACT, by 2045, every new tractor sold in California will need to be zero-emission.  While ACT does not apply to those simply operating tractors in California, it could affect the cost and/or supply of traditional diesel tractors and may lead to similar legislation in other states or at the federal level.  CARB also has announced intentions to adopt regulations ensuring that all tractors operating in California are operating with battery or fuel cell-electric engines in the future.  Whether these regulations will ultimately be adopted remains unclear.  We will continue monitoring any developments with respect to CARB regulations.

Federal and state lawmakers also have proposed potential limits on carbon emissions under a variety of climate-change proposals.  In December 2018, a coalition of nine Northeast and mid-Atlantic states and the District of Columbia announced an agreement to develop regional limits on carbon emissions from transportation sources.  Compliance with such regulations has increased the cost of our new tractors, may increase the cost of any new trailers that we will operate, may require us to retrofit certain of our pre-2011 model year trailers that operate in California, and could impair equipment productivity and increase our operating expenses, including with respect to our Plus Power fleet.expenses.  The EPA also announced

Concerns about global warming, climate change and other conditions provided motivation for policies generally referred to as the “Green New Deal”.  Such policies have been advanced by progressive members of the USU.S. Congress, are supported by numerous environmental groups and, to a certain extent, the incomingBiden administration.  We cannot predict when or whether any of these policies may be enacted or what their effect will be on us.

In order to reduce exhaust emissions, some states and municipalities have begun to restrict the locations and amount of time where diesel-powered tractors may idle.  Further, the Phase 2 Standards include requirements to reduce particulate emissions caused by idling diesel engines.  These restrictions could force the Company to purchase on-board power units that do not require the engine to idle or to alter our drivers’ behavior, either of which could result in a decrease in productivity, or increase in driver turnover.

The Company’s terminals often are located in industrial areas where groundwater or other forms of environmental contamination may have occurred or could occur.  The Company’s operations involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others.  Certain of the Company’s facilities have oil and/or fuel storage tanks and fueling islands.  A small percentage of the Company’s freight consists of low-grade hazardous substances, which subjects it to a wide array of regulations.  The Company has instituted programs to monitor and control environmental risks and promote compliance with applicable environmental laws and regulations; however, if (i) the Company is involved in a spill or other accident involving hazardous substances; (ii) there are releases of hazardous substances the Company transports; (iii) soil or groundwater contamination is found at or near the Company’s facilities or results from its operations; or (iv) the Company is found to be in violation of, or fails to comply with, applicable environmental laws or regulations, then it could be subject to clean-up costs and liabilities, including substantial fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on the Company’s business and results of operations.

Other Regulation

The Company’s operations are regulated and licensed by various United States federal and state, Canadian provincial, and Mexican federal agencies.  Interstate motor carrier operations are subject to safety requirements prescribed by the DOT.  Matters such as weight and equipment dimensions are also subject to United States federal and state regulation and Canadian provincial regulations.  The Company operates in the United States pursuant to operating authority granted by the DOT, in various Canadian provinces pursuant to operating authority granted by the Ministries of Transportation and Communications in such provinces, and within Mexico pursuant to operating authority granted by Secretaria de Comunicaciones y Transportes.  To the extent that the Company conducts operations outside the United States, it is subject to a wide variety of international and USU.S. export, import, business procurement, transparency, and corruption laws, including the Foreign Corrupt Practices Act, which prohibits United States companies and their intermediaries from bribing foreign officials for the purpose of obtaining or retaining favorable treatment.

The DOT, through the Federal Motor Carrier Safety Administration (“FMCSA”), imposes safety and fitness regulations on the Company and its drivers, including rules that restrict driver hours-of-service (“HOS”).  Changes to such HOS rules can negatively impact the Company’s productivity and affect its operations and profitability by reducing the number of hours per day or week its drivers may operate and/or disrupting its network.  FMCSA recently implemented four major changes to HOS rules that went into effect onin September 29, 2020.  The new HOS rules expanded short-haul limits, updated the adverse driving condition provision, added a split-sleeper option, and modified the 30-minute break requirement.  Certain industry groups have challenged these rules in court, but it remains unclear what, if anything, will come from such challenges.  While these new rules may alleviate certain burdens on the Company’s productivity and operations, any future changes to HOS rules (including any stemming from the pending challenges) could materially and adversely affect the Company’s operations and profitability.

There are two methods of evaluating the safety and fitness of carriers.  The first method is the application of a safety

FMCSA also recentlyhas indicated its intent to perform a new study on the causation of crashes.collisions.  Although it remains unclear whether such a study will ultimately be undertaken and completed, the results of such a study could spur further proposed and/or final rules in regard to safety and fitness.

In addition to the safety rating system, FMCSA has adopted the CSA program as an additional safety enforcement and compliance model that evaluates and ranks fleets on certain safety-related standards.  The CSA program analyzes data from roadside inspections, moving violations, crashcollision reports from the last two years, and investigation results.  The data is organized into seven categories.  Carriers are grouped by category with other carriers that have a similar number of safety events (e.g., crashes,collisions, inspections, or violations), and carriers are ranked and assigned a rating percentile to prioritize them for interventions if they are above a certain threshold.  CSA scores are used by FMCSA to identify carriers with potential safety issues for interventions, including warning letters, inspections, and audits that can then lead to more formal agency action.  Additionally, a poor score may (i) impact driver recruiting and retention by causing high-quality drivers to seek employment with other carriers, (ii) cause the Company’s customers to direct their business away from the Company and to carriers with higher fleet rankings, (iii) subject the Company to an increase in compliance reviews and roadside inspections, (iv) increase insurance costs, or (v)  cause the Company to incur greater than expected expenses in its attempts to improve unfavorable scores, any of which could adversely affect the Company’s results of operations and profitability.

Under the CSA program, these scores were initially made available to the public in five of the seven categories.  However, pursuant to the FAST Act, which was signed into law in December 2015, FMCSA was required to remove from public view the previously available CSA scores while it reviews the reliability of the scoring system.  The Company, however, continues to have access to its scores and will still be subject to intervention by FMCSA when such scores are above the intervention thresholds.  A congressionally mandated report by the National Academy of Sciences related to the CSA program was released in June 2017 which recommended: (i) reconfiguring the underlying statistical model under the CSA’s Safety Measurement System (the percentile ranking categories used to target carriers for intervention) with a so-called item response theory model to more accurately target at-risk carriers, (ii) making the scoring system more transparent and easier for carriers to replicate and understand, and (iii) departing from using relative metrics as the sole means for targeting carriers.  In response to this report, FMCSA created a small-scale IRT model but, due to data deficiencies and concerns that the complex model could not be adequately explained to both the trucking industry and the public, FMCSA stated that it would not decide on whether to create and adopt the full-scale IRT model until September 2020.  However, FMCSA missed that deadline and is yet to make any further announcements.  FMCSA also has also updated the CSA website improving data accessibility for enforcement users and carriers subject to the program.  Legislative proposals have been introduced that, if passed, would force FMCSA to restore public access to the CSA, but such proposals have yet to advance.  Insofar as any of these changes increase the likelihood of us receiving unfavorable scores or mandate the FMCSA to restore public access to scores, our results of operations and profitability could be adversely affected.  The Company will continue to monitor FMCSA’s testing and subsequent proposed rules that may affect the scoring methodology in order to continue to promote improvement of scores in all seven categories with ongoing reviews of all safety-related policies, programs and procedures for their effectiveness.

We have on certain occasions exceeded the established intervention thresholds in a number of the seven CSA safety-related categories.  Based on these unfavorable ratings, our driver fleet could be prioritized for intervention actions or roadside inspections, either of which could have a materially adverse effect on our results of operations.  In addition, customers may be less likely to assign loads to us.  We have put procedures in place to address areas where we have exceeded the thresholds.  However, we cannot guarantee these measures will be effective.

In 2015,May 2020, the FMCSA issued final rules requiring nearly allannounced that effective immediately it is making permanent a pilot program that will not count a collision in which a motor carrier was not at fault when calculating the carrier’s safety measurement profile, called the Crash Preventability Demonstration Program (“CPDP”).  The CPDP will expand the types of eligible collisions, modify the CSA’s Safety Measurement System to exclude collisions with “not preventable” determinations from the prioritization algorithm and note the “not preventable” determinations in the FMCSA program reports that provide carriers includingand other industry participants with access to safety records on drivers.  Under the Company, to installprogram, carriers with eligible collisions that occurred on or after August 2019, may submit a “Request for Data Review” with the required police accident report and use ELDs in their tractors by December 2019, in order to electronically monitor truck miles and enforce HOS rules.  The Companyother supporting documents, photos or videos through the FMCSA’s DataQs website.  If the FMCSA determines the collision was compliant with ELDs“not preventable,” it will be listed on 100% of all required vehicles prior to the December 2019 deadline.CSA’s Safety Measurement System but

Innot included for purposes of calculating certain of such carrier’s collision and safety indicators/metrics in the aftermath ofCSA’s Safety Measurement System.  Additionally, the September 11, 2001 terrorist attacks, federal, state and municipal authorities implemented and continue to implement various security measures, including checkpoints and travel restrictions“not preventable” determinations will be noted on large trucks.  The Transportation Security Administration (“TSA”) has adopted regulations that require determination by the TSA that each driver who applies for or renews his license for carrying hazardous materials is not a security threat.  

In January 2016, FMCSA’s final rule related to driver coercion took effect.  Under this rule, carriers, shippers, receivers, or transportation intermediaries that are found to have coerced drivers to violate certain FMCSA regulations (including HOS rules) may be fined up to $16,000 for each offense.pre-employment screening reports.  We have challenged eligible collisions under the CPDP program successfully.  

In December 2016, FMCSA and DOT published the Commercial Driver’s License Drug and Alcohol Clearinghouse rule as mandated by the Moving Ahead for Progress in the 21st Century Act.  The rule establishes and mandates a query to the Clearinghouse by employers and prospective employers to determine if current or prospective drivers have tested positive for drugs or alcohol or have refused to take such a test when requested.  The rule went into effect in January 2017 and mandated compliance by January 2020.  The Company is in compliance with all query requirements.  Pursuant to a new rule finalized by the FMCSA, effective November 2021, states are required to query the Clearinghouse when issuing, renewing, transferring, or upgrading a commercial driver’s license and must revoke a driver’s commercial driving privileges if such driver is prohibited from driving a motor vehicle for one or more drug or alcohol violations.

​We are generally subject to FMCSA rules regarding ELD use and prohibitions on driver coercion, and a patchwork of federal, state and municipal rules and regulations regarding security measures, checkpoints and travel restrictions, including those related to drivers who haul hazardous materials. Any changes to these rules and regulations could increase our compliance costs and adversely affect our efficiency and operations.

We currently hold Free and Secure Trade (“FAST”), Business Alliance for Secure Commerce (“BASC”), and Customs-Trade Partnership Against Terrorism (“C-TPAT”) statuses with various agencies that assist with our international operations.  If any of these statuses were to be revoked or suspended, we may suffer significant border delays.  This could cause our Mexican and Canadian operations to be less efficient than those of competing capacity providers that operate in Mexico or Canada and have FAST, BASC, and C-TPAT status.  We also face additional risks associated with our foreign operations, including restrictive trade policies and duties, taxes, or government royalties imposed by the Mexican or Canadian governments.

In July 2020, the United States-Mexico-Canada Agreement (“USMCA”) entered into effect, replacing the North American Free Trade Agreement.  The USMCA was designed to modernize food and agriculture trade, advance rules of origin for automobiles and trucks, and enhance intellectual property protections, among other matters, according to the Office of the US Trade Representative.  It is difficult to predict at this stage what could be the impact of the USMCA on the economy, including the transportation industry.  However, given the amount of North American trade that moves by truck, it could have a significant impact on supply and demand in the transportation industry, and could adversely impact the amount, movement, and patterns of freight we transport.  These and any other changes in tariffs, retaliatory tariffs or other trade restrictions could materially adversely affect our international business.

Effective January 1, 2020, motor carriers are required to perform annual random drug tests for 50 percent of existing drivers, an increase from the previous requirement of only 25 percent.  FMCSA must increase the minimum annual random drug and alcohol testing percentage rate when the data received for any calendar year indicate that the reported positive rate is equal to or greater than 1.0 percent.  The 2020 rate increase was in response to the results of the 2018 FMCSA Drug and Alcohol Testing Survey, which reported an increase to 1.0 percent of the random testing positive rate for controlled substances.  The minimum annual percentage rate for random alcohol testing remains at 10 percent.

In September 2020, the Department of Health and Human Services (“DHHS”) announced proposed mandatory guidelines to allow employers to drug test truck drivers and other federal workers for pre-employment and random testing using hair specimens.  However, the proposal also requires a second sample using either urine or an oral swab test if a hair test is positive, if a donor is unable to provide a sufficient amount of hair for faith-based or medical reasons, or due to an insufficient amount or length of hair.  The proposal specifically requires that the second test be done simultaneously at the collection event or when directed by the medical review officer after review and verification of laboratory-reported results for the hair specimen.  DHHS indicated the two-test approach is intended to protect federal workers from issues that have been identified as limitations of hair testing, and related legal deficiencies identified in two prior court cases.  It is unclear if, and when, a final rule may be put in place. Any final rule may reduce the number of available drivers.

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Other rules have been recently proposed or made final by FMCSA, including a rule imposing a lifetime ban on driving commercial trucks for those who commit certain severe human trafficking offenses, and a rule setting forth minimum driver training standards for new drivers applying for commercial driver’s licenses for the first time and to experienced drivers upgrading their licenses or seeking a hazardous materials endorsement, which was made final in December 2016, with a compliance date now delayed until February 2022.  While DOT abandoned proposals to require the use of speed limiting devices in 2017, DOT left open the possibility that it could resume such a pursuit in the future. Additionally, in May 2021 the Cullum Owings Large Truck Safe Operating Speed Act was reintroduced into the House of Representative and would require commercial motor vehicles with a gross weight of more than 26,000 pounds to be equipped with a speed limiter which would limit the vehicle’s speed to no more than 65 M.P.H.  The effect of these rules, to the extent they become effective, could result in a decrease in fleet production and driver availability, either of which could adversely affect the Company’s business or operations.

In March 2014, the Ninth Circuit Court of Appeals held that California state wage and hour laws are not preempted by federal law.  The case was appealed to the Supreme Court of the United States, which denied certiorari in May 2015, and accordingly, the Ninth Circuit Court of Appeals decision stood.  However, in December 2018, FMCSA granted a petition filed by the AmericaAmerican Trucking Associations (the “ATA”) and in doing so determined that federal law does preempt California’s meal and rest break laws, and interstate truck drivers are not subject to such laws.  FMCSA’s decision has been appealed by labor groups, and multiple lawsuits have been filed in federal courts seeking to overturn the decision, and thus it’s uncertain whether it will stand.decision. Despite attempts by labor groups to delay oral argument until the outcome of the 2020 Presidential election, the Ninth Circuit heard oral argument on the appeal on November 16, 2020.  No decision has been made.In January 2021, the Ninth Circuit upheld the FMCSA’s determination that federal law does preempt California’s meal and rest break laws, as applied to drivers of property-carrying commercial motor vehicles.  Other current and future state and local wage and hour laws, including laws related to employee meal breaks and rest periods, may also vary significantly from federal law.  Further, driver piece rate compensation, which is an industry standard, has been attacked as non-compliant with state minimum wage laws and lawsuits have recently been filed and/or adjudicated against carriers demanding compensation for sleeper berth time, layovers, rest breaks and pre-trip and post-trip inspections, the outcome of which could have major implications for the treatment of time that drivers spend off-duty (whether in a truck’s sleeper berth or otherwise) under applicable wage laws.  Both of these issues are adversely impacting the industry as a whole and the Company specifically, with respect to the practical application of the laws, thereby resulting in additional costs.  As a result, we, along with other companies in our industry, are subject to an uneven patchwork of wage and hour laws throughout the United States.  In the past, certain legislators have proposed federal legislation to preempt state and local wage and hour laws; however, passage of such legislation is uncertain.  If federal legislation is not passed, we will either need to comply with the most restrictive state and local laws across our entire fleet, or revise our management systems to comply with varying state and local laws.  Either solution could result in increased compliance and labor costs, driver turnover and decreased efficiency, and amplified legal exposure.

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In September 2019, California enacted A.B. 5 (“AB5”), a new law that changed the landscape of the state’s treatment of employees and independent contractors.  The test is referred to as the “ABC” test, and was originally handed down by the California Supreme Court in Dynamex Operations v. Superior Court in 2018.  Under the ABC test, workers performing services for a hiring entity are considered employees unless the hiring entity can demonstrate three things: the worker (A) is free from the hiring entity’s control, (B) performs work that is outside the usual course of the hiring entity’s business, and (C) customarily engages in the independent trade, work or type of business performed for the hiring entity.  How AB5 will be enforced is still to be determined.  In January 2021, however, the California Supreme Court ruled that the ABC Test could apply retroactively to all cases not yet final as of the date the original decision was rendered, April 2018.  While itAB5 was set was set to go into effect in January 2020, a federal judge in California issued a preliminary injunction barring the enforcement of AB5 on the trucking industry while the California Trucking Association (“CTA”) movesmoved forward with its suit seeking to invalidate AB5.  The Ninth Circuit Court of Appeals rejected the reasoning behind the injunction in April 2021, ruling that AB5 is not pre-empted by federal law, but granted a stay of the AB5 mandate in June 2021 (preventing its application and temporarily continuing the injunction) while the CTA petitioned the United States Supreme Court (the “Supreme Court”) to review the  decision.  In November 2021, the Supreme Court requested that the U.S. solicitor general weigh in on the case.  The injunction will remain in place until the Supreme Court makes a decision on whether to proceed in hearing the case.  While this preliminary injunction provides temporary relief to the enforcement of AB5, it remains unclear how long such relief will last, and whether the CTA will ultimately be successful in invalidating the law.  As the Company does not utilize a large population of owner-operators in California, if AB5 is upheld, the impact is expected to be insignificant; however, capacity and rates throughout the industry could be widely impacted.  It is also possible AB5 will spur similar legislation in states other than California, which could adversely affect our results of operations and profitability.  Despite this, opinions issued by the U.S. Department of Labor’s Wage and Hour Division and the National Labor Relations Board (“NLRB”) are consistent with the Company’s current treatment of its workforce. 

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Federal legislators continue to introduce legislation concerning the classification of independent contractors as employees, including legislation that proposes to increase the tax and labor penalties against employers who intentionally or unintentionally misclassify employees as independent contractors and are found to have violated employee overtime or wage requirements.  The most recent example being the Protecting the Rights to Organize (“PRO”) Act, which was reintroduced into the House of Representatives in February 2021, and passed by the House of Representatives and received by the Senate in March 2021 and remains with the Senate’s Committee on February 4, 2021.Health, Education, Labor, and Pensions.  The PRO Act proposes to apply the ABC test for classifying workers under Federal Fair Labor Standards Act claims.  It is unknown whether the proposed legislation will passbecome law as currently written or whether any industry based exemptions from any resulting law will be granted.

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Some states have adopted initiatives to increase their revenues from items such as unemployment, workers’ compensation, and income taxes, and the Company believes a reclassification of independent contractor drivers as employees would help states with this initiative.

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If the independent contractors the Company engages were determined to be its employees, the Company would incur additional exposure under federal and state tax, workers’ compensation, unemployment benefits, labor, employment, and tort laws, which could potentially include prior periods, as well as potential liability for employee benefits and tax withholdings.  The Company currently observes and monitors its compliance with current related and applicable laws and regulations, but it cannot predict whether it will be the subject of regulatory efforts or litigation challenging the independent contractor status of its workforce.  The Company cannot predict laws and regulations adopted in the future regarding the classification of the independent contractor drivers it engages or the impact on the Company’s business or operations.

In April 2016, the Food and Drug Administration (“FDA”) published a final rule establishing requirements for shippers, loaders, carriers by motor vehicle and rail vehicle, and receivers engaged in the transportation of food, to use sanitary transportation practices to ensure the safety of the food they transport as part of the Food Safety Modernization Act of 2011 (the “FSMA”). This rule sets forth requirements related to (i) the design and maintenance of equipment used to transport food, (ii) the measures taken during food transportation to ensure food safety, (iii) the training of carrier personnel in sanitary food transportation practices, and (iv) maintenance and retention of records of written procedures, agreements, and training related to the foregoing items.  These requirements took effect for larger carriers in April 2017 and are applicable when we perform as a carrier or as a broker.  However, if we are found to be in violation of applicable laws or regulations related to the FSMA or if we transport food or goods that are contaminated or are found to cause illness

and/or death, we could be subject to substantial fines, lawsuits, penalties and/or criminal and civil liability, any of which could have a material adverse effect on our business, financial condition, and results of operations.

As the FDA continues its efforts to modernize food safety, it is likely additional food safety regulations will take effect in the future.  In July 2020, the FDA released its “New Era of Smarter Food Safety” blueprint, which creates a ten year roadmap to create a more digital, traceable and safer food system.  This blueprint builds on the work done under the FSMA, and while it is still unclear what, if any, changes to the current governing framework may ultimately take effect, further regulation in this area could negatively affect our business by increasing our compliance obligations and related expenses going forward.

The Infrastructure Investment and Jobs Act (“IIJA”) was signed into law by President Biden in November 2021.  The roughly $1.2 trillion bill contains an estimated $550 billion in new spending which is expected to impact transportation.  In particular, it dedicates more than $100 billion for surface transportation networks and of that, roughly $66 billion for freight and passenger rail operations.  Among provisions in the law specific to trucking is an apprenticeship program for drivers younger than 21 to qualify to drive commercial trucks in interstate commerce.  The FMCSA announced the establishment of this program in January 2022 in an effort to help relieve the industry’s ongoing driver shortage.  The program is open to 18 to 20-year-old drivers who hold intrastate commercial driver licenses and sets a strict training regimen for participating drivers and carriers to comply with.  Motor carriers interested in this program must complete an application for participation and submit monthly data on an apprentice’s driver activity, safety outcomes, and additional supporting information.  It remains unclear whether regulatory changes will stem from the apprenticeship program and how the IIJA will be implemented into and effect our industry.  The IIJA may result in increased compliance and implementation related expenses, which could have a negative impact on our operations.    

The Biden Administration also has introduced the Build Back Better Act (“BBB”), which passed through the House of Representatives but is facing resistance in the Senate.  As currently proposed, the BBB would impact transportation by allocating funds to address industry related issues such as port congestion and traffic safety enforcement.  The bill also promotes low-emission programs, transit services and clean energy projects, as well as funding for climate change research.  It is unclear whether these legislative initiatives will be signed into law and what changes they may undergo.  However, adoption and implementation could negatively impact our business by increasing our compliance obligations and related expenses.  President Biden also has indicated an intention to make substantial changes to the current U.S. tax laws during his administration. Any changes to U.S. tax laws may have an adverse impact on our business and profitability.

In response to COVID-19’s effect on our industry, the FMCSA issued and/or extended various temporary responsive measures throughout the year.  These measures have largely been enacted to assist industry participants in operating under adverse circumstances and any further responsive measures remain unclear and could have a negative impact on our operations.

In November 2021, the US Department of Labor’s Occupational Safety and Health Administration (“OSHA”) published an emergency temporary standard (the “Emergency Rule”) requiring all employers with at least 100 employees to ensure that their employees are fully vaccinated or require any employees who remain unvaccinated to produce a negative COVID-19 test result on at least a weekly basis before coming to work.  The Emergency Rule has been blocked by the Supreme Court.  Effective January 2022, the U.S. is prohibiting unvaccinated foreigners from crossing the U.S.-Mexico border and U.S.-Canada border.  Furthermore, effective January 2022, Canada is prohibiting unvaccinated foreigners, including U.S. citizens, from crossing their border.  These border requirements, as well as any future vaccination, testing, or mask mandates that are allowed to go into effect, could, among other things (i) cause our unvaccinated employees to go to smaller employers, if such employers are not subject to future mandates, or leave us or the trucking industry, especially our unvaccinated drivers, (ii) result in logistical issues, increased expenses, and operational issues from arranging for weekly tests of our unvaccinated employees, especially our unvaccinated drivers, (iii) result in increased costs for recruiting and retention of drivers, as well as the cost of weekly testing, and (iv) result in decreased revenue if we are unable to recruit and retain drivers.  Any vaccination, testing, or mask mandates that are interpreted as applying to drivers are expected to significantly reduce the pool of drivers available to us and our industry, which would further impact the extreme shortage of available drivers.   Accordingly, any vaccination, testing, or mask mandates, if allowed to go into effect, could have a material adverse effect on our business, financial condition, and results of operations.

For further discussion regarding such laws and regulations, refer to the “Risk Factors” section under Part 1, Item 1A of this Form 10-K.

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The spread of COVID-19 has caused us to modify our business practices (including, employee work locations) and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers.  There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed.

Additionally, COVID-19  Furthermore, government vaccination, testing, or mask mandates could negatively affectincrease our internal controls over financial reporting as a portion ofturnover and make recruiting more difficult, particularly among our work force has beendriver personnel.  Vaccination, testing, and may continue to be required or determined to work from homemask mandates are further discussed in this Form 10-K under the heading “Business–Other Regulation” and therefore new processes, procedures, and controls could be required to respond to changes in our business environment.  Further, should any key employees become ill from COVID-19 and unable to work, the attention of the management team could be diverted.such discussion is incorporated by reference herein.  

The potential effects of COVID-19 may also impact many of our other risk factors discussed below.  The degree to which COVID-19 impactswill continue to impact our business operations, financial performance and results of operations will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted, including, but not limited to, the duration and spread of the COVID-19 outbreak, its severity, the emergence of new variants, and the actions to contain the virus or treat its impact and how quickly and to what extent normal economic conditions can resume.impact.

Our business is subject to general economic, credit, and business factors affecting the trucking industry that are largely out of our control, any of which could have a materially adverse effect on our operating results.

The truckload industry is highly cyclical, and our business is dependent on factors that may have a materially adverse effect on our results of operations, many of which are beyond our control.  We believe that some of the most significant of these factors include (i) excess tractor and trailer capacity in the trucking industry in comparison with shipping demand; (ii) driver shortages and increases in driver compensation; (iii) declines in the resale value of used revenue equipment; (iv) the impact of the COVID-19 pandemic; (v) compliance with ongoing regulatory requirements; (vi) strikes, work stoppages or work slowdowns at our facilities or at customer, port, border crossing or other shipping-related facilities; (vii) increases in interest rates, fuel taxes, insurance, tolls, and license and registration fees; and (viii) rising costs of healthcare.

We are affected by (i) recessionary economic cycles which may be characterized by weak demand and downward pressure on rates;cycles; (ii) changes in customers’ inventory levels and practices, including shrinking product/package sizes, and in the availability of funding for their working capital; and (iii) changes in the way our customers choose to utilize our services; (iv) downturns in our customers’ business cycles, particularlyincluding declines in market segmentsconsumer spending, (v) excess trucking capacity in the trucking industry in comparison with shipping demand; (vi) driver shortages and industries, such as retailincreases in driver compensation; (viii) the availability and manufacturing, where we have significant customer concentration, and regionsprice of new revenue equipment and/or declines in the resale value of used revenue equipment; (ix) the impact of the country, such as the midwestCOVID-19 pandemic; (x) compliance with ongoing regulatory requirements; (xi) strikes, work stoppages or work slowdowns at our facilities or at customer, port, border crossing or other shipping-related facilities; (xii) increases in interest rates, fuel taxes, insurance, tolls, and southeast, where we have a significant amountlicense and registration fees; and (xiii) rising costs of business.  Economic conditions may adversely affect our customers and their demand for and ability to pay for our services.  We may be required to increase our allowance for doubtful accounts for customers encountering adverse economic conditions.healthcare.

Economic conditions that decrease shipping demand or increase the supply of available tractors and trailers can exert downward pressure on rates and equipment utilization, thereby decreasing asset productivity.  For our USAT Logistics segment, imbalance between capacity and demand is usually favorable to our financial performance, while market equilibrium is usually unfavorable to our financial performance as logistics services are generally of less value to either shippers or carriers in such environment.  The risks associated with these factors are heightened when the United States economy is weakened.  Some of the principal risks during such times, which risks we have experienced during prior recessionary periods, are as follows:

We are subject to cost increases that are outside our control that could materially reduce our profitability if we are unable to increase our rates sufficiently.  Such costs include, but are not limited to, increases in driver and office employee wages, fuel prices, purchased transportation costs, taxes, interest rates, tolls, license and registration fees, insurance and claims, equipment maintenance, tires and other ancillary equipment components and healthcare and other benefits for our employees.  Further, we may not be able to appropriately adjust our costs to changing market demands.  In order to maintain high efficiencies in our business model, it is necessary to adjust staffing levels to changing market demands.  In periods of rapid change, it is more difficult to match our staffing level to our business levels.

Changing impacts of regulatory measures could adversely impact our operating efficiency and productivity, decrease our operating revenues and profitability, and result in higher operating costs.  See “Business−Environmental Regulation and – Other Regulation.”

In addition, declinesevents outside our control, such as deterioration of U.S. transportation infrastructure and reduced investment in the resale value of used revenue equipment can also affect our profitability and cash flows.  From time to time, various federal, state, or local taxes could also increase, including taxes on fuel.  We cannot predict whether, orsuch infrastructure, further developments in what form, any such increase will be enacted that may be applicable to us, but such an increase could adversely affect our results of operations.

In addition, we cannot predict future economic conditions, fuel price fluctuations, or how consumer confidence could be affected by the COVID-19 pandemic, actualstrikes or threatenedother work stoppages at our facilities or at customer, port, border or other shipping locations, armed conflicts or terrorist attacks, government efforts to combat terrorism, military action against a foreign state or group located in a foreign state or heightened security requirements.  Enhanced safetyrequirements could lead to wear, tear and damage to our equipment, driver dissatisfaction, reduced economic demand and freight volumes, reduced availability of credit, increased prices for fuel, equipment, or temporary closing of the shipping locations or U.S. borders.  Such events or enhanced security measures in connection with such events could impair our operating efficiency and productivity and result in higher operating costs.

We operate in a highly competitive and fragmented industry, and numerous competitive factors could impair our ability to maintain or improve our results of operations.

Numerous competitive factors present in our industry could impair our ability to maintain or improve our current profitability and could have a materially adverse effect on our results of operations.  These factors include the following:

We self-insure for a portion of our claims exposure and utilize a captive insurance company, which could significantly increase the volatility of, and decrease the amount of, our earnings.

Our business results in claims and litigation related to personal injuries, property damage and workers’ compensation.  We self-insure a portion of our claims exposure, which could increase the volatility of, and decrease the amount of, our earnings, and could have a materially adverse effect on our results of operations.  Our future insurance and claims expenses may exceed historical levels, which could reduce our earnings.  We currently accrue amounts for liabilities based on our assessment of claims that arise and our insurance coverage for the periods in which the claims arise and we evaluate and revise these accruals from time-to-time based on additional information.  However, ultimate results may differ from our estimates due to a number of uncertainties, including evaluation of severity, legal costs, and claims that have been incurred but not reported, which could result in losses greater than our reserved amounts.  At certain times in the past, we have had to adjust our reserves, and future significant adjustments may occur.  Further, our self-insured retention levels could change and result in more volatility than in recent years.  If we are required to reserve or pay additional amounts because our estimates are revised or the claims ultimately prove to be more severe than originally assessed or if our self-insured retention levels change, our financial condition and results of operations may be materially adversely affected.  For further discussion regarding our self-insured retention levels, including our self-insured retention amounts, refer to the “Business−Safety and Risk Management”.

We have a wholly owned captive insurance subsidiary, which is a regulated insurance company through which we insure a portion of our auto liability claims.  An increase in the number or severity of auto liability claims for which we self-insure through the captive insurance company or pressure in the insurance and reinsurance markets could adversely impact our earnings and results of operations.

Our captive insurance company is regulated by state authorities.  State regulations generally provide protection to policy holders, rather than stockholders.  Such regulations may increase our costs, limit our ability to change premiums, restrict our ability to access cash held by this subsidiary, and otherwise impede our ability to take actions we deem advisable.  To comply with certain state insurance regulatory requirements, cash and cash equivalents must be paid to our captive insurance subsidiary as capital investments and insurance premiums, which are restricted as collateral for anticipated losses.  Significant future increases in the amount of collateral required by third-party insurance carriers and regulators would reduce our liquidity and could adversely affect our results of operations and capital resources.

We maintain insurance for most risk above the amounts for which we self-insure and the cost of, and retention levels for, such insurance could increase, and we could suffer claims for amounts in excess of such insurance, or claims that are not covered by our insurance, any of which could have a materially adverse effect on our financial condition and/or results of operations.

We maintain insurance for most risks above the amounts for which we self-insure with licensed insurance carriers.  If any claim is not covered by an insurance policy, exceeds our coverage, or falls outside the aggregate coverage limit, we would bear the excess or uncovered amount, in addition to our self-insured amount.  Although we believe our aggregate insurance limits are sufficient to cover reasonably expected claims, it is possible that one or more claims could exceed those limits.  Insurance carriers have recently raised premiums for the trucking industry.  Our insurance and claims expense could increase if we have a similar experience at renewal, or we could find it necessary to raise our self-insured retention or decrease our aggregate coverage limits when our policies are renewed or replaced.  Additionally, with respect to our insurance carriers, the industry is experiencing a decline in the number of carriers and underwriters that offer excess insurance policies or that are willing to provide insurance for trucking companies, and the necessity to go off-shore for insurance needs has increased.  This may have a material adverse effect on our insurance costs or make insurance in excess of our self-insured retention more difficult to find, as well as increase our collateral requirements for policies that require security.  Changes in applicable laws modifying or increasing mandated insurance coverages, such as the legislation introduced in the House of Representatives in April 2021, could also increase the Company’s insurance expenses.  In the event that (i) our insurance expenses increase, (ii) reserves are increased, (iii) we become unable to find excess coverage in amounts we deem sufficient, (iii)(iv) we experience a claim in excess of our coverage limits, or (iv)(v) we experience a claim for which we do not have coverage, there could be a materially adverse effect on our results of operations and financial condition.

Healthcare legislation and cost inflation also could negatively impact financial results by increasing annual employee healthcare costs.  In addition, rising healthcare costs could force us to make changes to our existing benefits program, which could negatively impact our ability to attract and retain employees.

Upgrading our tractors to reduce the average age of our fleet may not increase our profitability or result in cost savings as expected or at all.

Upgrades of our tractor fleet may not result in an increase in profitability or cost savings.  Expected improvements in operating costs may lag behind new tractor deliveries, primarily because in executing a tractor fleet upgrade, we may experience costs associated with preparing our old tractors for disposal, and our new tractors for integration into our fleet, and lost driving time while swapping revenue equipment.  Further, tractor prices have in recent years increased and may continue to increase, due in part to government regulations applicable to newly manufactured tractors and diesel engines.engines, as well as component part shortages.  

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In addition, we cannot be certain that an agreement will be reached between the Company and prospective vendors on price or other terms that we deem favorable.  If we do enter an agreement for the purchase of new tractors, we could be exposed to the risk that the new tractor deliveries will be delayed.  Accordingly, we are subject to an increased risk that upgrades of our tractor fleet will not result in the operational results, cost savings and increases in profitability that we expect.

Fluctuations in the price or availability of fuel, the volume and terms of diesel fuel purchase commitments, surcharge collection, and hedging activities may increase our costs of operations.

Fuel is one of our largest operating expenses.  Diesel fuel prices fluctuate greatly due to factors beyond our control, such as political events, terrorist activities, armed conflicts, commodity futures trading, devaluation of the dollar against other currencies, and hurricanes and other natural ordisasters, which could increase in frequency and severity due to climate change, as well other man-made disasters, each of which may lead to an increase in the cost of fuel.  Fuel prices also are affected by the rising demand for fuel in developing countries, and could be materially

Increased prices for new revenue equipment, design changes of new engines, and decreased availability of new revenue equipment, as well as other materials, equipment, goods and services, could have a materially adverse effect on our business, financial condition, and/or results of operations.

We are subject to risk with respect to higher prices for new tractors and trailers.  We have experienced an increase in prices for new tractors over the past few years, a significant increase in costs in recent quarters, and the resale value of the used tractors has not increased to the same extent.  Prices have increased and may continue to increase, due, in part, to government regulations applicable to newly manufactured tractors, trailers and diesel engines, higher commodity prices, and the pricing power of equipment manufacturers.  In addition, we have recently equippedequip our tractors with safety, aerodynamic, and other options that increase the price of new equipment.  More restrictive EPA and state emissions standards have required manufacturers to introduce new engines.  These regulations have increased the cost of our new tractors and could impair equipment productivity, result in lower fuel mileage, and increase our operating expenses.  Our business could be harmed if we are unable to continue to obtain an adequate supply of new tractors and trailers for these or other reasons.  As a result, we expect to continue to pay increased prices for revenue equipment and incur additional expenses and related financing costs for the foreseeable future.  Furthermore, reduced equipment efficiency and lower fuel mileage may result from new engines designed to reduce emissions at the sacrifice of fuel efficiency, thereby increasing our operating expenses.

of operations, and cash flows could be adversely affected.

Increases in driver compensation or difficulties attracting and retaining qualified drivers could have a materially adverse effect on our profitability and the ability to maintain or grow our fleet.

Like many truckload carriers, we experience substantial difficulty in attracting and retaining sufficient numbers of qualified drivers, which includes the engagement of independent contractors.  The truckload industry is subject to a shortage of qualified drivers.  Such shortage is exacerbated during periods of economic expansion, in which alternative employment opportunities, such as those in the construction and manufacturing industries, are more plentiful and freight demand increases, or during periods of economic downturns, in which unemployment benefits might be extended and financing is limited for independent contractors who seek to purchase equipment or for students who seek financial aid for driving school.  Regulatory requirements, including those related to safety ratings, ELDs and HOS changes, COVID-19 mitigation measures, such as vaccination, testing or mask requirements, and an improved economy could further reduce the number of eligible drivers or force us to increase driver compensation to attract and retain drivers.  We have seen evidence that stricter HOS regulations adopted by the DOT in the past have tightened and, to the extent new regulations are enacted, may continue to tighten, the market for eligible drivers.  We believe the required enforcement of ELDs may further tighten such market.  The lack of adequate tractor parking along some highways and congestion caused by inadequate highway funding may make it more difficult for drivers to comply with HOS regulations and cause added stress for drivers, further reducing the pool of eligible drivers.  We believe the shortage of qualified drivers and intense competition for drivers from other trucking companies will create difficulties in maintaining or increasing the number of our drivers and may restrain our ability to engage a sufficient number of drivers and independent contractors, and our inability to do so could negatively impact our operations.  Further, the compensation we offer our drivers and independent contractor expenses is subject to market conditions, and we may find it necessary to increase driver compensation and/or independent contractor rates in future periods.

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The growth of our asset-light service offering poses unique risks.

We are continuing to implement our efforts to increase the proportion of our revenue obtained fromgrow our “asset-light operations,” which primarily represents our USAT Logistics segment and the independent contractors we engage.  Execution of this growth plan involves the risk of customer loss or deterioration if either our Trucking or USAT Logistics operations creates a customer issue that impacts the other where we have customer overlap, decreased utilization of Company equipment if loads with desirable profitability and lanes are allocated to third parties, growth impediments given our need to rely on third-party providers and an independent contractor market that is contracting and subject to litigation and regulatory risks, and competitive pressures from other asset-light companies with greater financial, personnel, and technological resources.  If we are unsuccessful in growing our USAT Logistics segment,asset-light operations, it may have a materially adverse effect on our future results of operations.

Our USAT Logistics segment and our engagement of independent contractors are dependent upon the services of third-party capacity providers, including other truckload carriers.  For these operations, we do not own or control the transportation assets that deliver our customers’ freight, and do not employ the people directly involved in delivering the freight.  These third-party providers may seek other freight opportunities or may require increased compensation in times of improved freight demand or tight trucking capacity.  Our inability to secure the services of these third parties could significantly limit our ability to serve our customers on competitive terms.  Additionally, if we are unable to secure sufficient equipment or other transportation services to meet our commitments to our customers or provide services on competitive terms, our operating results could be materially and adversely affected.  Our ability to secure sufficient equipment or other transportation services is affected by many risks beyond our control, including equipment shortages in the transportation industry,and increased equipment prices, particularly among contracted truckload carriers, limited driver availability, interruptions in service due to labor disputes, changes in regulations impacting transportation, and changes in transportation rates.  Further, we believe that the recently effective ELD mandate may cause a decrease in third party transportation capacity and make securing such capacity more difficult and/or expensive.

Developments in labor and employment law and any unionizing efforts by employees could have a materially adverse effect on our results of operations.

We face the risk that Congress, federal agencies, or one or more states could approve legislation or regulations significantly affecting our businesses and our relationship with our employees, such as the previously proposed federal legislation referred to as the Employee Free Choice Act, which would have substantially liberalized the procedures for union organization.  None of our domestic employees are currently covered by a collective bargaining agreement, but any attempt by our employees to organize a labor union could result in increased legal and other associated costs.  Additionally, given the NLRB’s “speedy election” rule, our ability to timely and effectively address any unionizing efforts would be difficult.  If we entered into a collective bargaining agreement with our domestic employees, the terms could materially adversely affect our costs, efficiency, and ability to generate acceptable returns on the affected operations.

We may not make acquisitions in the future, or if we do, we may not be successful in our acquisition strategy.

While acquisitions have not in the past provided a substantial portion of our growth, in October 2018, we completed the acquisition of Davis Transfer Company and related entities (the “Davis Acquisition”).  Any future acquisitions we undertake could involve the dilutive issuance of equity securities and/or incurring indebtedness or large one-time expenses.  In addition, any future acquisitions we may consummate involve numerous risks, any of which could have a materially adverse effect on our business, financial condition, and results of operations, including:

We depend on the proper functioning, availability, and security of our information and communication systems (and the data contained therein), and a systems failure or unavailability, including those caused by cybersecurity breaches, could cause a significant disruption to and adversely affect our business.

We depend heavily on the proper functioning, availability, and security of our information and communication systems, including financial reporting and operating systems, in operating our business.  These systems are protected through physical and software safeguards, but are still vulnerable to fire, storm, flood,natural disasters, such as fires, storms, and floods, which may increase in frequency and severity due to climate change, as well as power loss, telecommunications failures, physical or electronic break-ins, ransomware attacks, terrorist attacks, internet failures, computer viruses, and similar events beyond our control.  More sophisticated and frequent cyberattacks in recent years have also increased security risks associated with information technology systems.  We also maintain information security policies to protect our systems, networks, and other information technology assets (and the data contained therein) from cybersecurity breaches and threats, such as hackers, malware, ransomware, and viruses; however, such policies cannot ensure the protection of our systems, networks, and other information technology assets (and the data contained therein).  If our

Our production systems are supported utilizing a hybrid hosting model that includes virtualized on premise servers and cloud service providers.  Production data is replicated to a secondary data center in a separate geographic region, which protects our information in the event of a significant disaster.  This redundant data center allows the data related to our systems to be recovered following an incident.  However, recovery of such data may not immediately restore our ability to utilize our information systems.  In the event such systems are significantly damaged, it could take several days before our systems are returned to full functionality.  Our communication services are provided through a mixture of on premise, hosted data center, and cloud services.  Recovery time is dependent upon the nature of the event and the affected communication service.

We receive and transmit confidential data with our customers, drivers, vendors, employees, and service providers in the normal course of business.  Despite our implementation of secure transmission techniques, internal data security measures, training, and monitoring tools, our information and communication systems are vulnerable to cybersecurity threats and breach attempts from both external and internal sources.  Any such breach could result in disruption of communications with our customers, drivers, vendors, employees, and service providers and improper access to, misappropriation of, altering, or deleting information in our systems, including customer, driver, vendor, employee, and service provider information and our proprietary business information.  A cybersecurity incident (including a breach) could damage our business operations and reputation and could cause us to incur costs associated with repairing our systems, increased security, customer notifications, lost operating revenue, litigation, regulatory action, fines and penalties and reputational damage.

Seasonality and the impact of weather and other catastrophic events affect our operations and profitability.

Our tractor productivity decreases during the winter season because inclement weather impedes operations, and some shippers reduce their shipments after the winter holiday season.  Revenue can also be adversely affected by inclement weather, holidays, and holidays,the number of business days that occur during a given period, since revenue is directly related to available working days of shippers.  At the same time, operating expenses increase and fuel efficiency declines because of engine idling and harsh weather creating higher accident frequency, increased claims, and more frequent or costly equipment repairs.  We may also suffer from weather-related or other unforeseen events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes, explosions or terrorist attacks.  These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, damage or destroy our assets, or adversely affect the business or financial condition of our customers, any of which could have a materially adverse effect on our results of operations or make our results of operations more volatile.

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against certain members of our industry seeking to reclassify independent contractors as employees for a variety of purposes, including workers’ compensation and health care coverage.  In addition, companies that utilize lease-purchase independent contractor programs, such as us, have been more susceptible to reclassification lawsuits and several recent court decisions have been made in favor of those seeking to classify as employees certain independent contractors that participated in lease-purchase programs.  Taxing and other regulatory authorities and courts apply a variety of standards in their determination of independent contractor status.  Our classification of independent contractors may be the Company engages weresubject of audits by such authorities from time to time.  While we have been successful in continuing to classify our independent contractor drivers as independent contractors and not employees, we may be unsuccessful in defending that position in the future.  If our independent contractors are determined to be itsour employees, itwe would incur additional exposure under federal and state tax, workers’ compensation, unemployment benefits, labor, employment, and tort laws, which could potentially includeincluding for prior periods, as well as potential liability for employee benefits and tax withholdings.  The laws impacting the classification of independent contractors are further discussed in this Form 10-K under the heading “Business–Other Regulation” and are incorporated by reference herein.  

We operate in a highly regulated industry, and changes in existing regulations or violations of existing or future regulations could have a materially adverse effect on our results of operations.

We operate in the United States pursuant to operating authority granted by the DOT, in various Canadian provinces pursuant to operating authority granted by the Ministries of Transportation and Communications, and our Mexican business activities are subject to operating authority granted by Secretaria de Comunicaciones y Transportes.  Company drivers and independent contractors also must comply with the safety and fitness regulations of the DOT, including those relating to drug and alcohol testing, driver safety performance, and HOS.  Matters such as weight, electronic on-board reporting, equipment dimensions, exhaust emissions, and fuel efficiency are also subject to government regulations.  We also may become subject to new or more restrictive regulations relating to fuel efficiency, exhaust emissions, HOS, ergonomics, drug and alcohol testing, electronic on-board reporting of operations, collective bargaining, security at ports, speed limiters, driver training, and other matters affecting safety or operating methods.  Future laws and regulations may be more stringent, require changes in our operating practices, influence the demand for transportation services, or require us to incur significant additional costs.  Higher costs we incur, or higher costs incurred by suppliers who pass the costs on to us, could have a materially adverse effect our results of operations.  Changes in regulations, such as those related to trailer size and gross vehicle weight limits, HOS, drug and alcohol testing, and ELDs, could increase capacity in the industry or improve the position of certain competitors, either of which could negatively impact pricing and volumes, or require additional investments by us.  The short and long term impacts of changes in legislation or regulations are difficult

The CSA program adopted by FMCSA could adversely affect our results of operations, our ability to maintain or grow our fleet, and our customer relationships.

Under the CSA, fleets are evaluated and ranked against their peers based on certain safety-related standards.  Carriers are grouped by category with other carriers that have a similar number of safety events (i.e. crashes,collisions, inspections, or violations) and carriers are ranked and assigned a rating percentile or score to prioritize them for interventions if they are above a certain threshold. As a result, our fleet could be ranked poorly as compared to peer carriers which could have an adverse effect on our business, financial condition and results of operations. We recruit and retain first-time drivers to be part of our driver team, and these drivers may have a higher likelihood of creating adverse safety events under the CSA.  The occurrence of future deficiencies could affect driver recruitment by causing high-quality drivers to seek employment with other carriers or limit the pool of drivers we are comfortable hiring or could cause our customers to direct their business away from us and to carriers with higher fleet safety rankings, any of which would adversely affect our results of operations.  Additionally, competition for drivers with favorable safety backgrounds may increase, which could necessitate increases in driver-related compensation costs.  Further, we may incur greater than expected expenses in our attempts to improve unfavorable scores or in responding to a mandate from FMSCA to restore public access to scores.

In December 2015, Congress passed the FAST Act, which calls for significant CSA reform.  The FAST Act directs FMCSA to conduct studies of the scoring system used to generate CSA rankings to determine if it is effective in identifying high-risk carriers and predicting future crash risk.  This study was conducted and delivered to FMCSA in June 2017 with several recommendations to make the CSA program more fair, accurate, and reliable.  In August 2018, FMCSA reported to Congress the proposed changes it intends to make to the CSA program.  These proposed changes are discussed in this Form 10-K under the heading “Business−Other Regulation” and are incorporated by reference herein.  Insofar as any of these changes increase the likelihood of us receiving unfavorable scores or mandate FMSCA to restore public access to scores, it could adversely affect our results of operations and profitability.

We are compliant withhave exceeded the currently established intervention thresholds in a numberthree of the seven CSA safety-related categories.  Based on any category that exceeds the established threshold, we may be prioritized for an intervention action or roadside inspection, either of which could have a materially adverse effect on our results of operations.  In addition, customers may be less likely to assign loads to us and our insurance costs could increase.  We have put procedures in place in an attempt to address areas where we exceed thresholds, and have experienced improvements in these measures.  However, we cannot assure you these measures will be effective.

The CSA program is discussed in more detail in this Form 10-K under the heading “Business−Other Regulation” and such discussion is incorporated by reference herein.  Insofar as any changes in the CSA program increase the likelihood of us receiving unfavorable scores or mandate FMSCA to restore public access to scores, it could adversely affect our results of operations and profitability.

Receipt of an unfavorable DOT safety rating could have a materially adverse effect on our results of operations.

We currently have a satisfactory DOT rating, which is the highest available rating under the current safety rating scale.  If we were to receive a conditional or unsatisfactory DOT safety rating, or similar rating under any future DOT rating system, it could materially adversely affect our business, financial condition, and results of operations as our customers may require a satisfactory DOT safety rating, and a conditional or unsatisfactory rating could materially adversely affect or restrict our operations.  The Other Regulation sectionDOT safety rating system is discussed in Item 1 of Part I ofmore detail in this Annual Report on Form 10-K discusses several proposed, pending, suspended,under the heading “Business−Other Regulation” and final regulations that could materially impact our business and operations andsuch discussion is incorporated by reference herein.

Compliance with various environmental laws and regulations that our operations are subject to may increase our costs of operations and non-compliance with such laws and regulations could result in substantial fines or penalties.

In addition to direct regulation under the DOT and related agencies, we are subject to various environmental laws and regulations dealing with the hauling and handling of hazardous materials, fuel storage tanks, fuel spills, exhaust emissions from our vehicles and facilities, and discharge and retention of storm water.  Our truck terminals often are located in industrial areas where groundwater or other forms of environmental contamination may have occurred or could occur.  Our operations involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal,

discussion is incorporated by reference herein.

Uncertainty relating to piece rate legislation could result in litigation and/or have a materially adverse effect on our operating results.

The trucking industry has been confronted with a continuous patchwork of laws at state and local levels, related to, among other things, employee rest and meal breaks.  Further, driver piece rate compensation, which is an industry standard, has been attacked as not being compliant with state minimum wage laws.  Both of these issues are adversely impacting the Company and the motor carrier industry as a whole, with respect to the practical application of the laws; thereby resulting in additional cost.  Effective January 1, 2016, California passed AB 1513, which clarified how employers must compensate piece-rate workers for mandatory rest and recovery periods and other unproductive time.  This new law created exposure for trucking companies continuing to pay by piece rate and increased the costs of doing business.  

In March 2014, the Ninth Circuit Court of Appeals held that California state wage and hour laws are not preempted by federal law.  The case was appealed to the Supreme Court of the United States, which in May 2015 refused to review the case, and accordingly, the Ninth Circuit Court of Appeals decision stood.  However, in December 2018, FMCSA granted a petition filed by the ATA and in doing so determined that federal law does preempt California’s meal and rest break laws, and interstate truck drivers are not subject to such laws and, in May 2019, FMCSA’s determination was considered binding by the Federal Court for the Central District of California.  Despite this, FMCSA’s decision has been appealed by labor groups and multiple lawsuits have been filed in federal courts seeking to overturn the decision, and thus it’s uncertain whether it will stand.  Despite the attempt by labor groups to delay oral arguments based on the outcome of the Presidential election, the Ninth Circuit heard oral argument on the appeal on November 16, 2020.  No decision has been made.  Other current and future state and local laws, including laws related to employee meal breaks and rest periods, may also vary significantly from federal law. Further, driver piece rate compensation, which is an industry standard, has been attacked as non-compliant with state minimum wage laws and lawsuits have recently been filed and/or adjudicated against carriers demanding compensation for sleeper berth time, layovers, rest breaks and pre-trip and post-trip inspections, the outcome of which could have major implications for the treatment of time that drivers spend off-duty (whether in a truck’s sleeper berth or otherwise) under applicable wage laws. Both of these issues are adversely impacting the Company and the industry as a whole, with respect to the practical application of the laws, thereby resulting in additional cost.  As a result, we, along with other companies in the industry, could become subject to an uneven patchwork of laws throughout the U.S.  Federal legislation has been proposed in the past to preempt certain state and local laws; however, passage of such legislation is uncertain.  If federal legislation is not passed, we will either need to comply with the most restrictive state and local laws across our entire network, or overhaul our management systems to comply with varying state and local laws.  Either solution could result in increased compliance and labor costs, increased driver turnover, increased legal exposure, and decreased operational efficiency.

The transportation industry is subject to security requirements that could increase our costs of operation.

Because transportation assets continue to be a target of terrorist activities, federal, state and municipal governments have adopted, and in the future may adopt, security requirements that increase operating costs and potentially slow service for businesses, including those in the transportation industry.  For example, in the aftermath of the September 11, 2001, terrorist attacks, federal, state and municipal authorities implemented and continue to implement various security measures, including checkpoints and travel restrictions on large trucks.  In addition, the  TSATransportation Security Administration (“TSA”) has adopted regulations that require determination by the TSA that each driver who applies for or renews his license for carrying hazardous materials is not a security threat.  These regulations could reduce the pool of qualified drivers, which could require us to increase

Our financing obligations could negatively impact our future operations, our ability to satisfy our capital needs, or our ability to engage in other business activities or strategic opportunities.  We also cannot assure you that additional financing will be available to us when required or, if available, will be on terms satisfactory to us.

In the future, we may need to obtain additional financing that may not be available or, if it is available, may result in a reduction in the percentage ownership of our then-existing stockholders.

We may need to raise additional funds in order to:

The Credit Facility contains a single springing financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of at least 1.0 to 1.0.  The financial covenant springs only in the event excess availability under the Credit Facility drops below 10%(i) 10.0% of the lenders’ total commitments under the Credit Facility.Facility and (ii) $13.0 million.  In addition, in the event our excess availability under the Credit Facility drops below 20%12.5% of the lenders’ total commitments under the Credit Facility, we may be subject to certain additional restrictions, such as restricting our ability to pay dividends, make certain investments, prepay certain indebtedness, execute share repurchase programs, and enter into certain acquisitions and hedging arrangements.  The fixed charge coverage ratio is affected by our level of earnings and is adversely affected by operatingor losses and other charges such as severance costs and impairment charges.

In recent years, we have incurred operating losses, severance and restructuring costs and impairment charges relating to, among others, a decline in the appraised value of our Company-owned revenue equipment fleet.  Future operating losses, severance and restructuring actions and further declines in the appraised value of our Company-owned revenue equipment fleet would adversely affect our fixed charge coverage ratio and could impair our ability to make further borrowings under our Credit Facility.

The Credit Facility contains certain restrictions and covenants related to, among other things, dividends, liens, acquisitions and dispositions, affiliate transactions, and the incurrence of other indebtedness.  The Credit Facility is secured by a pledge of substantially allcertain of our Company-owned tractors and trailers, with the exclusion of any real estate orand excludes revenue equipment financed outside the Credit Facility.  The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility may be accelerated, and the lenders’ commitments may be terminated.

If we fail to comply with any of our financial covenants, restrictions, or requirements, it could result in default under the relevant agreement.  In the event of any such default, if we failed to obtain replacement financing or amendments to, or waivers under, the applicable financing arrangements, existing lenders could cease to make further advances, declare existing debt to be immediately due and payable, fail to renew letters of credit, impose significant restrictions and requirements on our operations, institute foreclosure proceedings against collateralized assets, or impose significant fees.  If acceleration occurs, it may be difficult or expensive to refinance the accelerated debt and the issuance of additional equity securities could dilute stock ownership.  Even if new financing can be procured, more stringent borrowing terms could mean that credit is not available to us on acceptable terms.  A default under these financing arrangements could cause a materially adverse effect on the liquidity, financial condition, and results of operations.  

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If we are unable to generate sufficient cash from operations or obtain borrowing on favorable terms, we may be forced to reduce our operations, limit our growth, enter into less favorable financing arrangements, or operate revenue equipment for longer periods, any of which could have a materially adverse effect on our financial condition and results of operations.

Changes in taxation could lead to an increase of our tax exposure and could affect the Company’s financial results.

President Biden has provided some informal guidance on what federal tax law changes he supports, such as an increase in the corporate tax rate from its current top rate of 21%.  If an increase in the corporate tax rate is passed by Congress and signed into law, it could have a materially adverse effect on our financial results and financial position.  At December 31, 2020,2021, the Company  has a grosstotal deferred tax liability of $39.7$36.5 million and a net deferred tax liability of $23.4$21.9 million.  The amount of deferred tax liability is determined by using the enacted tax rates in effect for the year in which differences between the financial statement and tax basis of assets and liabilities are expected to reverse.  Accordingly, our net current tax liability has been determined based on the currently enacted rate of 21%.  If the current rate were increased due to legislation, it would haveresult in an immediate revaluation of our deferred tax assets and liabilities in the year of enactment.   For example, an increase in the tax rate from 21% to 26% would result in the immediate increase in our net deferred tax liability of approximately $5.6$4.3 million, with a corresponding increase to income tax expense in the year of enactment to reflect the revaluation.

General Risks

Management and key employee turnover or failure to attract and retain qualified management and other key personnel, could have a materially adverse effect on our business, financial condition, and results of operations.

We depend on the leadership and expertise of our executive management team and other key personnel to design and execute our strategic and operating plans.  While we have employment agreements in place with certain members of our management team, there can be no assurance we will continue to retain their services and we may become subject to significant severance payments if our relationship with such members is terminated under certain circumstances.  Further, turnover, planned or otherwise, in key leadership positions could adversely impact our ability to manage our business efficiently and effectively, and such turnover can be disruptive and distracting to management and employees, may lead to additional departures of existing personnel, and could have a materially adverse effect on our results of operations.  

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The market price of our common stock may be volatile.

The price of our common stock may fluctuate widely, depending upon a number of factors, many of which are beyond our control.  These factors include, among other items: the perceived prospects of our business and our industry as a whole; differences between our actual financial and operating results and those expected by investors and analysts; changes in analysts’ recommendations or projections, including such analysts’ outlook on our industry as a whole; actions or announcements by our competitors; changes in the regulatory environment in which we operate; significant sales or hedging of shares by a principal stockholder; actions taken by stockholders that may be contrary to the board of director’s recommendations; and changes in general economic or market conditions.  In addition, stock markets generally experience significant price and volume volatility from time to time which may adversely affect the market price of our common stock for reasons unrelated to our performance.

We could determine that our goodwill and other intangible assets are impaired, thus recognizing a related loss.

As of December 31, 2020,2021, we had goodwill of $5.2 million and other intangible assets, net of $15.1$13.8 million.  We evaluate our goodwill and other intangible assets for impairment.  We could recognize impairments in the future, and we may never realize the full value of our intangible assets.  If these events occur, our profitability and financial condition will suffer.

Certain provisions of our charter documents and Delaware law could deter acquisition proposals and make it difficult for a third party to acquire control of the Company.

Provisions in our Restated and Amended Certificate of Incorporation (“Certificate of Incorporation”) may discourage, delay, or prevent a change of control or changes in our Board of Directors or management that our stockholders may consider favorable.  For example, our Certificate of Incorporation authorizes the Board of Directors to issue up to 1,000,000 shares of “blank check” preferred stock.  Without stockholder approval, our Board of Directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock, which could make it more difficult for a third party to acquire the Company.  Our Certificate of Incorporation also provides:

that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control.  For purposes of Section 203, “interested stockholder” means, generally, someone owning 15% or more of our outstanding voting stock during the prior three years, subject to certain exceptions as described in Section 203.  These provisions will apply even if the change may be considered beneficial by some of our stockholders, and thereby negatively affect the price that investors might be willing to pay in the future for our common stock.  In addition, to the extent that these provisions discourage an acquisition of our Company or other change of control transaction, they could deprive stockholders of opportunities to realize takeover premiums for their shares of our common stock.

We face various risks associated with stockholder activists, which may be disruptive to our business.

Activist stockholders have in the past advocated for certain changes at USA Truck and may attempt to gain representation on or control of our Board of Directors, through a proxy contest or other means, the possibility of which may create uncertainty regarding our future.  These perceived uncertainties may make it more difficult to attract and retain qualified personnel, raise customer concerns, or cause volatility in the price of our common stock.  The presence of such activist stockholders, a potential proxy contest, or an activist stockholder lawsuit also may create a significant distraction for our management team and require us to expend significant time and resources, depending on the nature of the activists’ agendas, and could interfere with our ability to execute our strategic initiatives.  Although we are not currently aware of any activist stockholders who own a substantial portion of our stock at this time, we cannot assure you that we will be able to agree to favorable terms with activist stockholders that might acquire an interest in our Company.

We could become subject to unsolicited takeover proposals, which may be disruptive to our business.

We have in the past been subject to unsolicited takeover proposals and could become subject to such proposals in the future.  Responding to such proposals, exploring the availability of alternative transactions that reflect our full intrinsic value and instituting legal action in connection therewith has in the past created a significant distraction for our management team and required us to expend significant time and resources, and we believe any future unsolicited proposals would cause similar disruptions to our business.  Such proposals may disrupt our business by causing uncertainty among current and potential employees, suppliers, and customers, which could negatively impact our financial condition, results of operations and strategic initiatives and cause volatility in our stock price.  These consequences, alone or in combination, may have a materially adverse effect on our business.  Although we have entered into a change of control/severance plan with certain of our officers and members of our management team, the change of control arrangements may not be adequate to allow us to retain critical employees during a time when a change of control is being proposed or is imminent..imminent.

Item 2.          PROPERTIES

USA Truck’s executive offices andThe Company’s headquarters are located in Van Buren, Arkansas on approximately 104 acres in Van Buren, Arkansas.  This facility consistsand consist of approximately 117,000150,000 square feet of office space, training and drivermaintenance facilities and approximately 30,000 square feet of maintenance space.  The headquarters also has approximately 11,000 square feet of warehouse space and two other structures with approximately 22,000 square feet of office and warehouse space which are currently leased to a third party.storage facilities.  The expense for building and office rent is recorded in the operations“Operations and maintenancemaintenance” line item in the accompanying consolidated statement of income (loss) and comprehensive income (loss).income.  

The Company’s network consists of 20In addition to the facilities including USAT Logistics offices.  listed below, the Company has access to trailer drop yards in various locations across the country that are leased on a month-to-month basis.  

As of December 31, 2020,2021, the Company’s facilities were located in or near the following cities: