The below letter from President & CEO Eric Fuller to shareholders is included in the U.S. Xpress 2020 Annual Report, available on our investor site at investor.usxpress.com

Undoubtedly, 2020 was one of the most difficult years in modern history; it presented challenges no one could have foreseen. The coronavirus pandemic caused widespread shutdowns, global economic strife, massive supply chain disruptions and even an abrupt shift from traditional office environments to working from home. Priorities changed rapidly. For most businesses, even the boldest ambitions for 2020 had to be shelved in order to survive. We pressed on with a transformation that will define and drive our business for the next 20 years.

Once the pandemic has finally run its course, many remarkable stories will come to light. I believe that’s particularly true of the logistics industry. I’m awestruck by the courage, tenacity and ingenuity of our shippers (and even our peers) in the face of unprecedented adversity. An entire industry rose to the occasion to ensure essential supplies continued to ship across the country and store shelves remained stocked. Moreover, I’ve never been prouder of our people who worked so hard to keep our operations running smoothly despite such a difficult environment.

Everyone will have a story to tell about 2020. Our story started in 2018, when we first began to research and explore what the future of logistics and trucking would look like. Here’s the conventional view of the truckload market: it’s an $800 billion, highly fragmented, low-margin industry that has its ups and downs in a cyclical rate environment. Yet despite all of the radical and innovative technological breakthroughs that have occurred since 2000, trucking hasn’t changed very much. Trucking is a complex industry, but it’s also one where it’s easy to be comfortable. That’s a dream come true for a disruptor.

The trucking industry has long been a curiosity for venture capital and Silicon Valley. I have spent much time personally exploring what technology disruption would mean for the industry and our Company. Through my work I have come to the conclusion that this will be a radically different industry in a few short years: one where many companies will be forced out of business by new entrants leveraging advanced technologies to create low-cost, scalable models.

I also realized that, sooner rather than later, the tried-and- true approaches to trucking would become obsolete. Shippers will remain incredibly price-sensitive, but will expect a heightened degree of sophistication in their transportation partners. Carriers will still compete in a highly commoditized market, but new entrants will use innovative technologies to build unique operating models from the ground up. And they’ll do this free of the long- held paradigms, diseconomies of scale and high costs that have plagued the industry for so long. I believe when the dust settles, the market will eventually be carved up by no more than 25 companies with the ability to orchestrate freight movements at scale.

We realized we needed more than just new technology and a new mindset – we also needed a blank slate. So, in 2019 we got to work and created two new operating models from the ground up: Variant on the asset side of the business and Xpress Technologies on the third-party capacity side. Importantly, we made the decision to build these new operating models outside of the confines of our legacy organization and to invest in them separately. We hired the types of people you don’t typically see in a trucking or logistics company – people with advanced degrees in machine learning, artificial intelligence, and deep data analytics. Our new teams worked to solve the issues inherent in our legacy operating structures in a low-cost and scalable manner.

We even looked outside of our industry to enhance our leadership team across several key areas of the business, from driver recruiting to our legal department. I’m completely confident that we have the management team that will take U.S. Xpress to new heights over the next decade.

As part of our strategy, we knew 2019 would be a year of investment and development. Accordingly, we believed 2020 was the year that these investments would begin to have a material impact on our business. We never imagined these two new, innovative operating models would be put to the test by a once-in-a-century global health and economic crisis. Yet, both operating models exceeded our expectations in terms of milestones met, progress realized and feedback from shippers. We can now definitively say that the decision to invest in these business models was the right one. These initiatives aren’t merely motivated by a desire to survive. The objective in everything we’ve done, and will continue to do going forward, is to disrupt and scale in a way our industry has never seen. There’s no other choice.

Keep in mind that both of these businesses were built from the ground up and rely on entirely different infrastructures and technologies from our legacy businesses. Since we’ve operated these businesses in tandem with our legacy enterprise, duplicative expenses greatly impacted our earnings in 2020. As these new models scale and cannibalize our legacy business, the most immediate impact will be realized in improved earnings. However, the long-term momentum we’ll gain from creating something unique in the marketplace – a model that truly scales – is expected to create considerable value for our shippers and shareholders alike.

The two initiatives I just shared with you are the preliminary steps in our 10-year plan. It’s worth noting that 10-year plans are uncommon in our space. Most trucking companies typically operate with a one-year outlook because the trucking market is too fickle for an extended strategy to take root. Companies typically have a six- quarter playbook they follow when the market is weak and another when the market is strong: rinse and repeat, so to speak. In my opinion, the nature of the freight market is a significant reason that few have been able to meaningfully scale in our sector. Long-term plans and investments are usually de-emphasized in a down cycle.

Consequently, scalable growth isn’t our only ambition for Variant and Xpress Technologies. We believe these new operating models will give us the ability to “break the cycle” and manage with a long-term outlook. Our leadership team will be able to think, and act, proactively. That’s going to be an essential ingredient in our evolution, especially if we’re going to compete with technologically savvy, well-financed entrants into our industry.

Safety is another critical component of our 10-year strategy. We’ve invested in forward-facing cameras, disc brakes and hair follicle drug testing because we believe that our industry plays an essential role in making the interstates safe for everyone who uses them. That emphasis on safety has driven approximately 20% year- over-year improvement in our overall accident count in 2020. Over the long run, we’ll look for even more opportunities to make meaningful safety improvements.

We also released our first Corporate Responsibility Report in 2020, which will be updated annually. In our report, we outlined priorities for our Company including our goal of reducing our carbon footprint by 60% over the next 15 years and doubling our community involvement by 2025, with a focus on safety and well-being, military veterans’ programs, education and innovation, and families and health. We’re committed to becoming more environmentally responsible, establishing deeper connections with our community partners, and providing more robust benefits for our team members as we focus on building a diverse and inclusive workforce.

We’ll discuss our 10-year vision in more detail as 2021 unfolds. But, in closing, I want to encourage everyone – shippers and carriers – to take stock of a tumultuous 2020 by acknowledging the exceptional things that happened in our industry. It’s easy to pick apart all of the things that went wrong last year: the driver shortages, and other struggles amidst a pandemic. However, it’s better to celebrate the smallest victories as well as remarkable strides we made together in the face of such great adversity.

The future will bring many more challenges and opportunities. I’m encouraged by the progress we’ve made towards building two new business models that we believe won’t just endure, but will thrive in the years to come.

Eric Fuller, President and Chief Executive Officer