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.

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 nine months ended September 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  September 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.

The Company uses interest rate swap agreements to manage its exposure to fluctuations in interest rates on variable-rate debt. The interest rate swaps are designated as cash flow hedges and changes in the fair value of the swaps are recognized in accumulated other comprehensive income and reclassified into earnings as the hedged interest payments affect earnings. At September 30, 2026, the swaps had an aggregate notional amount of $15.3 million and a fair value asset of $1.4 million, of which $0.2 million is included in the other short-term assets and $1.2 million is included in other assets, net line items of the condensed consolidated balance sheet. At December 31, 2025, the swaps had an aggregate notional amount of $16.3 million and a fair value asset of $0.8 million, of which $0.2 million is included in the other short-term assets and $0.6 million is included in other assets, net line items of the condensed consolidated balance sheet. During the three and nine months ended September 30, 2026, amounts reclassified from accumulated other comprehensive income into interest expense, net were gains of less than $0.1 million and $0.1 million, respectively compared with $0.1 million and $0.2 million during the three and nine months ended September 30, 2025 respectively.

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 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.

The following table provides a summary (in thousands) of the contingent consideration payments made during the three and nine months ended September 30, 2026 and 2025:

Of the $13.5 million paid for the contingent consideration liability during 2026, $5.1 million is classified as financing cash flows within the condensed consolidated statements of cash flows and $8.4 million is classified as operating cash flows within the condensed consolidated statements of cash flows. Of the $12.9 million paid for the contingent consideration liability during 2025, $5.0 million is classified as financing cash flows and $7.9 million is classified as operating cash flows within the condensed consolidated statements of cash flows.

The following table provides a summary (in thousands) of the changes in the fair value of the contingent consideration during the three and nine months ended September 30, 2026 and 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. Of the $9.0 million and $22.5 million contingent consideration liability reported at September 30, 2026 and December 31, 2025, respectively, $5.4 million and $13.2 million are included in accounts payable, respectively, and $3.6 million and $9.3 million are included other long-term liabilities, respectively, in our condensed consolidated balance sheets.

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