Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements.

The fair value of the contingent consideration arrangement is based on inputs that are not observable in the market and is estimated using a probability-weighted method. The significant unobservable inputs used in the fair value of the contingent consideration liability include the financial projections over the earn-out period, the volatility of the underlying financial metrics, and estimated discount rates. Significant increases or decreases to any of these inputs could result in a significantly higher or lower liability. Ultimately, the liability will be equivalent to the amount settled, and the difference between the fair value estimate and amount settled will be recorded as a component of general supplies and expenses within the condensed consolidated statements of operations.

The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date. The life insurance policies are held in a rabbi trust maintained by the Company with the intent to fund its non-qualified deferred compensation plan. The assets of the rabbi trust remain subject to the claims of the Company’s general creditors and, therefore, do not represent assets restricted from the Company’s use for purposes of fair value measurement. While the trustee is subject to customary administrative provisions that limit assignment of assets within the trust, such provisions do not restrict the Company's ability to access the cash surrender value of the policies and do not materially impact the determination of fair value or the exit price in an orderly transaction. Further, the insurance policies can be surrendered without penalties or charges imposed by the insurance carrier.

A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Financial Instruments Measured at Fair Value on a Recurring Basis

There were no transfers between Level 1, Level 2 and Level 3 during the six months ended June 30, 2026 or for the year ended  December 31, 2025.

The carrying amount of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments. 

Interest rates that are currently available to us for issuance of long-term debt with similar terms and remaining maturities are used to estimate the fair value of our long-term debt, which primarily consists of equipment installment notes. The fair value of our equipment installment notes approximated the carrying value as of  June 30, 2026, as the weighted average interest rate on these notes approximates the market rate for similar debt. Borrowings under our revolving Credit Facility (as defined herein) approximate fair value due to the variable interest rate on that facility.

Contingent consideration arrangements require us to pay up to $30.0 million of additional consideration to Lew Thompson & Son Trucking, LLC's ("LTST's") former owners based on LTST's results during the first three calendar years following closing, up to $12.0 million of additional consideration to Sims Transport Services, LLC's ("Sims") former owners based on Sims' results during the first four calendar years following closing, and up to $5.0 million of additional consideration to the seller of the assets of a small, multi-stop distribution carrier we acquired in February 2025 (the "Asset Acquisition"). Additionally, the acquisition of assets that are now operating as Star (the "Star Acquisition") requires us to pay additional consideration to the sellers as described in Note 13 "Acquisition of Assets of a Brokerage Business Operating as Star Logistics Solutions".

The fair value of the contingent consideration is adjusted at each reporting period based on changes to the expected cash flows and related assumptions.

During the three and six months ended June 30, 2026, there were contingent payments made of $12.5 million and $12.5 million based on LTST's results for the second calendar year following closing and $0.3 million and $0.6 million as a result of the Asset Acquisition, respectively. Of the $13.1 million paid for the contingent consideration liability during 2026, $4.8 million was classified as financing cash flows within the condensed consolidated statements of cash flows and $8.3 million was classified as operating cash flows within the condensed consolidated statements of cash flows. During the three and six months ended June 30, 2025, there were contingent payments made of $0.1 million and $0.1 million as a result of the Asset Acquisition and none and $12.5 million based on LTST's results for the first calendar year following closing, respectively. Of the $12.6 million paid for the contingent consideration liability during 2025, $4.6 million was classified as financing cash flows and $8.0 million was classified as operating cash flows within the condensed consolidated statements of cash flows.

For the three months ended June 30, 2026, the fair value of the contingent consideration decreased $1.0 million due to the change in the fair value for the Sim's contingent consideration partially offset by an increase of $0.3 million due to the change in the fair value for the LTST contingent consideration. The fair value for the LTST contingent consideration for the three months ended June 30, 2025 increased $0.7 million. For the six months ended June 30, 2026, the fair value of the contingent consideration decreased $1.0 million due to the decrease in the fair value for the Sim's contingent consideration, partially offset by the $0.7 million increase in the LTST contingent consideration. The contingent consideration  increased $5.0 million as a result of the Asset Acquisition and $1.4 million due to a change in the fair value for the LTST contingent consideration for the six months ended June 30, 2025. The adjustment to the fair value of the contingent consideration liability was recorded as a component of general supplies and expenses within the condensed consolidated statements of operations. The contingent consideration liability is included in accounts payable and other long-term liabilities in our condensed consolidated balance sheets.

The following table provides a summary (in thousands) of the activity for the contingent consideration liability for 2026: