You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and related notes.

Forward-looking Information

Our quarterly report on Form 10-Q, including this discussion and analysis of our financial condition and results of operations and our disclosures about market risk, contains certain "forward-looking statements." These statements represent our expectations, beliefs, intentions, or strategies concerning future events and by their nature involve risks and uncertainties. Forward looking statements include, among others, statements about our future performance, the continuation of historical trends, the sufficiency of our sources of capital for future needs, the effects of acquisitions, the expected impact of recently issued accounting pronouncements, and the outcome or effects of litigation. Risks that could cause actual results to differ materially from our current expectations include changes in market demand and pricing for our services; the impact of competition, the impact of higher fuel prices, changes in relationships with our customers, freight levels and our ability to source capacity to transport freight, our ability to source produce, the risks associated with litigation and insurance coverage, our ability to integrate acquisitions, the impacts of war, the risks associated with operations outside the United States, risks associated with the potential impacts of changes in government regulations, risks associated with the produce industry, including food safety and contamination issues, and changing economic conditions. Therefore, actual results may differ materially from our expectations based on these and other risks and uncertainties, including those described in Item 1A. Risk Factors of our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2007, filed on February 29, 2008.

Overview

Our Company

We are a global provider of multimodal transportation services and logistics solutions, operating through a network of branch offices in North America, Europe, Asia, and South America. We are a non-asset based transportation provider, meaning we do not own the transportation equipment that is used to transport our customers' freight. We work with approximately 48,000 transportation companies worldwide, and through those relationships we select and hire the appropriate transportation providers to meet our customers' needs. As an integral part of our transportation services, we provide a wide range of value added logistics services, such as supply chain analysis, freight consolidation, core carrier program management, and information reporting.

In addition to multimodal transportation services, we have two other logistics business lines: fresh produce sourcing and fee-based information services. Our Sourcing business is the buying, selling, and marketing of fresh produce. We purchase fresh produce through our network of produce suppliers and sell it to retail grocers and restaurant chains, produce wholesalers, and foodservice distributors. In many cases, we also arrange the transportation of the produce we sell through our relationships with specialized transportation companies. Our Information Services business is our subsidiary, T-Chek Systems, Inc., which provides a variety of management and information services to motor carrier companies and to fuel distributors. Those services include funds transfer, driver payroll services, fuel management services, permit procurement, and fuel and use tax reporting.

Our Business Model

We are a service company. We act principally to add value and expertise in the procurement and execution of transportation and logistics, including sourcing of produce products for our customers. Our gross revenues represent the total dollar value of services and goods we sell to our customers. Our gross profits are our gross revenues less the direct costs of transportation, products, and handling, including motor carrier, rail, ocean, air, and other costs, and the purchase price of the products we source. Our gross profits are the primary indicator of our ability to source, add value, and sell services and products that are provided by third parties, and we consider them to be our primary performance measurement. Accordingly, the discussion of our results of operations below focuses on the changes in our gross profits.

We keep our business model as variable as possible to allow us to be flexible and adapt to changing economic and industry conditions. We buy most of our transportation capacity and produce on a spot-market basis. We also keep our personnel and other operating expenses as variable as possible. Compensation, our largest operating expense, is performance-oriented and, for most employees in the branch network, based on the profitability of their individual branch office.

In addition, we do not have pre-committed targets for headcount growth. Our personnel decisions are decentralized. Our branch managers determine the appropriate number of employees for their offices, within productivity guidelines, based on their branch's volume of business. This helps keep our personnel expense as variable as possible with the business.

Our Branch Network

Our branch network is a major competitive advantage. Building local customer and carrier relationships has been an important part of our success, and our worldwide network of offices supports our core strategy of serving customers locally, nationally, and globally. Our branch offices help us penetrate local markets, provide face-to-face service when needed, and recruit contract carriers. Our branch network also gives us knowledge of local market conditions, which is important in the transportation industry because it is dynamic and market-driven.

Our branches work together to complete transactions and collectively meet the needs of our customers. In 2007, approximately 30% of our truckload shipments were shared transactions between branches. For many of our significant customer relationships, we coordinate our efforts in one branch and rely on multiple branch locations to deliver specific geographic or modal needs. In addition, our methodology of providing services is very similar across all branches. Our North American branches have a common technology platform that they use to match customer needs with supplier capabilities, to collaborate with other branch locations, and to utilize centralized support resources to complete all facets of the transaction.

We added four branches in the first nine months of 2008, and are planning to open up to three more by the end of 2008. Because we usually open new offices with only two or three employees, we do not expect them to make a material contribution to our financial results in the first few years of their operation.

Our People

Because we are a service company, our continued success is dependent on our ability to continue to hire and retain talented, productive people. Our headcount grew by 173 employees during the third quarter of 2008. Our personnel decisions are decentralized; our branch managers determine the appropriate number of employees for their offices, within productivity guidelines, based on their branch's volume of business. In times of slowing growth, our headcount growth typically slows to reflect the growth expectations of the branches.

Branch employees act as a team in their sales efforts, customer service, and operations. A significant portion of our branch employees' compensation is performance-oriented, based on individual performance and the profitability of their branch. We believe this makes our sales employees more service-oriented, focused, and creative. In 2003, we implemented a restricted stock program to better align our key employees with the interests of our shareholders, and to motivate and retain them for the long term. These restricted stock awards vest over a five year period based on the performance of the company, and have been awarded annually since 2003.

Our Customers

In 2007, we worked with approximately 29,000 customers. We work with a wide variety of companies, ranging in size from Fortune 100 companies to small family businesses, in many different industries. Our customer base is very diverse. In 2007, our top 100 customers represented approximately 32% of our total gross profits, and our largest customer was approximately 3% of our total gross profits.

Our Carriers

Our carrier base includes motor carriers, railroads (primarily intermodal service providers), air freight, and ocean carriers. In 2007, we increased our carrier base to approximately 48,000. While our volume with many of these new providers may still be small, we believe the growth in our contract carrier network shows that new transportation providers continue to enter the industry, and that we are well positioned to continue to meet our customers' needs. Approximately 75% of our truckload shipments in 2007 were transported by motor carriers that had fewer than 100 tractors. In our truckload business, no single carrier represents more than 1% of our carrier capacity.

Although we signed up approximately three thousand new truckload contract carriers during the third quarter of 2008, we believe that in the marketplace overall, a significant number of truckload carriers continued to exit the market and large carriers reduced equipment totals, resulting in reduced capacity supply overall.

Our Goals

Since we became a publicly-traded company in 1997, our long-term compounded annual growth target has been 15% for gross profits, income from operations, and earnings per share. Although there have been periods where we have not achieved these goals, since 1997 on a compounded basis we have exceeded this growth goal in all three categories. We expect to reach our long-term growth goal primarily through internal growth but acquisitions that fit our growth criteria and culture may also augment our growth.

Our expectation is that over time, we will continue to achieve our long-term target of 15% growth, but that we will have periods in which we exceed that goal and periods in which we fall short. In the third quarter of 2008, our gross profits grew 12.3% to $351.6 million. Our income from operations increased 12.7% to $148.6 million and our diluted earnings per share increased 12.5% to $0.54.

While cycles of fluctuating capacity supply and freight demand are a normal part of the freight transportation marketplace, a prolonged market of soft freight demand is the most challenging environment for us to reach our long-term growth goals. We did not meet our long-term growth goal in this challenging economic environment. While we don't see any indications in the marketplace that cause us to believe the environment will improve in the short term, we are aggressively selling, growing our network, and working to continue taking market share. In addition, during times of less freight demand and slower growth, we monitor our variable cost disciplines more aggressively to ensure we adjust with the market.

In summary, we are adapting to the short-term challenges and conditions. Our long-term approach and goals remains the same.

Results of Operations

The following table summarizes our gross revenues by service line:



                                        Three Months Ended September 30,           Nine Months Ended September 30,
                                                                       %                                         %
                                          2008            2007       change         2008            2007       change
Gross revenues (in thousands)
Transportation                       $    1,953,555    $ 1,537,660     27.0 %   $   5,522,521    $ 4,349,251     27.0 %
Sourcing                                    350,060        315,755     10.9         1,062,290        981,114      8.3
Information Services                         12,978         11,735     10.6            38,700         33,836     14.4

Total                                $    2,316,593    $ 1,865,150     24.2 %   $   6,623,511    $ 5,364,201     23.5 %

The following table sets forth our gross profit margins, or gross profit as a percentage of gross revenues, between services and products:

                                  Three Months Ended         Nine Months Ended
                                     September 30,             September 30,
                                  2008           2007         2008         2007
         Transportation             15.9 %         18.0 %       16.4 %      18.6 %
         Sourcing                    8.1            7.9          8.1         7.9
         Information Services      100.0          100.0        100.0       100.0

         Total                      15.2 %         16.8 %       15.6 %      17.2 %

The following table summarizes our gross profits by service line:

                                         Three Months Ended September 30,            Nine Months Ended September 30,
                                                                         %                                         %
                                          2008             2007        change          2008            2007      change
Gross profits (in thousands)
Transportation:
Truck                                 $     262,500    $     238,804      9.9 %   $      774,027    $  700,835     10.4 %
Intermodal                                   11,952            9,891     20.8             31,830        29,461      8.0
Ocean                                        17,164           11,561     48.5             43,453        31,606     37.5
Air                                           8,474            6,896     22.9             26,235        21,954     19.5
Miscellaneous                                10,297            9,402      9.5             30,997        26,213     18.3

Total transportation                        310,387          276,554     12.2            906,542       810,069     11.9
Sourcing                                     28,223           24,907     13.3             85,561        77,119     10.9
Information Services                         12,978           11,735     10.6             38,700        33,836     14.4

Total                                 $     351,588    $     313,196     12.3 %   $    1,030,803    $  921,024     11.9 %

The following table represents certain statement of operations data, shown as percentages of our gross profits:

                                                        Three Months Ended         Nine Months Ended
                                                           September 30,             September 30,
                                                        2008           2007         2008         2007
Gross profits                                            100.0 %        100.0 %      100.0 %     100.0 %
Selling, general, and administrative expenses
Personnel expenses                                        43.3           44.9         43.9        46.0
Other selling, general, and administrative expenses       14.4           13.0         14.5        13.1

Total selling, general, and administrative expenses       57.7           57.9         58.4        59.1

Income from operations                                    42.3           42.1         41.6        40.9
Investment and other income                                0.5            1.1          0.6         1.2

Income before provision for income taxes                  42.7           43.2         42.2        42.1
Provision for income taxes                                16.1           16.5         16.0        16.1

Net income                                                26.6 %         26.7 %       26.2 %      26.0 %

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

REVENUES.

Total gross revenues increased 24.2% to $2.3 billion in the quarter of 2008 from $1.9 billion in the third quarter of 2007. Our gross revenues continue to grow faster than our gross profits and our earnings per share, driven primarily by volume increases in nearly all of our businesses, and price increases driven by the increase in the price of fuel.

Total Transportation gross profits increased 12.2% to $310.4 million in the third quarter of 2008 from $276.6 million in the third quarter of 2007. Our Transportation gross profit margin decreased to 15.9% in 2008 from 18.0% in 2007 due to gross profit margin declines in several of our transportation businesses.

Our truck gross profits consist of truckload and less-than-truckload ("LTL") services. Our truck gross profit growth of 9.9% in the third quarter of 2008 was driven by volume growth, offset by declines in our truckload gross profit margins. Our truckload volumes increased approximately 9%. The volume growth was relatively consistent throughout the quarter. Including fuel, our truckload rates increased approximately 17%; excluding estimated impacts of fuel, underlying linehaul rates increased approximately 3%. Our truckload gross profit margins declined primarily due to higher fuel prices. In addition, our cost of capacity increased. Our LTL shipment volumes increased approximately 18%. Our LTL gross profit margins were consistent with the third quarter of 2007.

Our intermodal gross profit increase of 20.8% in the third quarter was driven by volume growth, offset slightly by a decline in gross profit margins. Our gross profit margin decline was due to increased fuel prices.

Our ocean transportation gross profits increased 48.5% in the third quarter of 2008 driven by volume and margin expansion. Our previously disclosed acquisition of Transera contributed approximately 20% to the overall increase.

Our air transportation gross profit growth of 22.9% in the third quarter of 2008 was driven by volumes and increased margins. Our previously disclosed acquisition of Transera contributed approximately 11% to the overall increase.

Miscellaneous transportation gross profits consist primarily of transportation management fees and customs brokerage fees. The increase of 9.5% in the third quarter was driven primarily by volume growth in transportation management.

For the third quarter, Sourcing gross profits increased 13.3% to $28.2 million in 2008 from $24.9 million in 2007. This increase was driven by changes in produce prices and product mix, including a shift toward higher cost specialized and valued added products. Our gross margins increased slightly to 8.1% in 2008 compared to 7.9% in 2007.

Our Information Services gross profits grew 10.6% in the third quarter of 2008. Our growth was driven by volume growth in our fleet card, cash advance services products, and our carrier compliance services. We also continued to benefit from the price of fuel as some of our merchant fees are based on a percentage of the total sale amount.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. For the third quarter, operating expenses increased 11.9% to $203.0 million in 2008 from $181.4 million in 2007. This was due to an increase of 8.4% in personnel expenses and an increase of 23.9% in selling, general, and administrative expenses.

As a percentage of gross profits, total operating expenses decreased slightly to 57.7% in the third quarter of 2008 from 57.9% in the third quarter of 2007. This decrease was due to a decline in personnel expenses as a percentage of gross profits from 44.9% to 43.3%, offset partially by an increase in our selling, general, and administrative expenses as a percentage of gross profits. Expenses related to our restricted stock program and various other incentive plans are variable, based on growth in our earnings. Our slower earnings growth in the third quarter of 2008 compared to the third quarter of 2007 resulted in a decrease in expense related to some of these incentives plans. This contributed to our personnel expenses growing slower than our gross profits.

Historically many of these awards have been done on a periodic or multi-year cycle, rather than annually, and they vest for a period of up to five years, depending on our growth in earnings. One impact of this practice is that there likely will be periods where more than one of these awards are being earned and expensed. On November 6, 2008, the Compensation Committee approved approximately 2.5 million restricted shares and restricted units which are available to begin vesting in 2009. Our 2006 restricted equity grant will likely continue to vest and also be expensed in 2009.

The increase in our selling, general, and administrative expenses was driven by several expense categories, including occupancy and provision for doubtful accounts. We have approximately 20% more square feet of office space than we did in the third quarter of 2007. Our provision for doubtful accounts is affected by the level of activity and the receivables balance, as well as specific customer accounts during the third quarter of 2008. During the third quarter of 2008, we had a higher level of customer specific collection issues than we typically experience.

INCOME FROM OPERATIONS. Income from operations increased 12.7% to $148.6 million for the three months ended September 30, 2008. This increase was primarily driven by the growth in our gross profits. Income from operations as a percentage of gross profits was 42.3% and 42.1% for the three months ended September 30, 2008 and 2007.

INVESTMENT AND OTHER INCOME. Investment and other income decreased 54.0% to $1.6 million for the three months ended September 30, 2008. During 2007 and through part of January 2008, we held auction rate security investments. We were able to exit those investments at par and do not have any concerns around liquidity or valuation of our investments. However, with lower short-term market rates on all investments and as a result of concentrating the majority of our cash in money markets during the third quarter, our yields were significantly less than a year ago.

PROVISION FOR INCOME TAXES. Our effective income tax rate was 37.7% for the third quarter of 2008 and 38.1% for the third quarter of 2007. The effective income tax rate for both periods is greater than the statutory federal income tax rate primarily due to state income taxes, net of federal benefit.

NET INCOME. Net income increased 11.7% to $93.6 million for the three months ended September 30, 2008. Basic net income per share increased 12.2% to $0.55 for the three months ended September 30, 2008. Diluted net income per share increased 12.5% to $0.54 for the three months ended September 30, 2008.

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

REVENUES.

Total gross revenues increased 23.5% to $6.6 billion for the nine months ended September 30, 2008 from $5.4 billion for the nine months ended September 30, 2007. Our gross revenues continue to grow faster than our gross profits and our earnings per share, driven primarily by volume increases in nearly all of our businesses, and price increases driven by the increase in the price of fuel.

Total Transportation gross profits increased 11.9% to $906.5 million for the nine months ended September 30, 2008 from $810.1 million for the nine months ended September 30, 2007. Our Transportation gross profit margin decreased to 16.4% in 2008 from 18.6% in 2007 due to gross profit margin declines in most of our transportation modes.

Our truck gross profits consist of truckload and LTL services. Our truck gross profit growth of 10.4% for the nine months ended September 30, 2008 was driven by volume growth, offset by declines in our truckload gross profit margins. Our truckload volumes increased approximately 12%. Including fuel, our truckload rates increased approximately 11 percent; excluding estimated impacts of fuel, underlying linehaul rates were consistent with the nine months ended September 30, 2008. Our truckload gross profit margins declined due to higher fuel prices and increased cost of capacity. Our LTL shipments increased approximately 22%. Our LTL gross profit margins were consistent with the nine months ended September 30, 2007.

Our intermodal gross profit increase of 8.0% for the nine months ended September 30, 2008 was driven by volume growth, offset slightly by a decline in gross profit margins. Our gross profit margin decline was due to increased fuel prices.

The increase of 37.5% in our ocean transportation gross profits for the nine months ended September 30, 2008 was driven by volume growth and price increases. The acquisition of Transera contributed approximately 7% to the overall increase.

In our air transportation business, approximately one-third of our gross profit growth of 19.5% for the nine months ended September 30, 2008 came from our domestic air business, which includes our previously-disclosed acquisition of LXSI Services Inc. on July 13, 2007. Our previously disclosed acquisition of Transera contributed approximately 3.6% to the overall increase in air gross profits.

Miscellaneous transportation gross profits consist primarily of transportation management fees and customs brokerage fees. The increase of 18.3% for the nine months ended September 30, 2008 was driven primarily by volume growth in transportation management.

For the nine months ended September 30, Sourcing gross profits increased 10.9% to $85.6 million in 2008 from $77.1 million in 2007, due to higher volumes and a slight increase in our gross profit margin.

Our Information Services gross profits grew 14.4% for the nine months ended September 30, 2008. Our growth was driven by volume growth in our core fuel card and cash advance services and an increase in our revenue per transaction, due to the price of fuel. With certain merchants our fee is based on a percentage of the sale amount.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. For the nine months ended September 30, operating expenses increased 10.5% to $601.6 million in 2008 from $544.2 million in 2007. This was due to an increase of 6.9% in personnel expenses and an increase of 23.4% in selling, general and administrative expenses.

As a percentage of gross profits, total operating expenses decreased to 58.4 percent for the nine months ended September 30, 2008 from 59.1% for the nine months ended September 30, 2007. This decrease was due to a decline in personnel expenses as a percentage of gross profits from 46.0% to 43.9%, offset partially by an increase in our selling, general and administrative expenses as a percentage of gross profits. Expenses related to our restricted stock program and various other incentive plans are variable, based on growth in our earnings. Our slower earnings growth for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007 resulted in a decrease in expense related to some of these incentives plans. This contributed to our personnel expenses growing slower than our gross profits.

The increase in our selling, general, and administrative expenses was driven by several expense categories, including occupancy and provision for doubtful accounts.

INCOME FROM OPERATIONS. Income from operations increased 13.9% to $429.2 million for the nine months ended September 30, 2008. This increase was primarily driven . . .