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 economic conditions such as the current recession and decreased consumer confidence, changes in market demand and pressures on the pricing for our services; disruption to our operations or a decrease in overall market demand caused by pandemic; competition and growth rates within the third party logistics industry; freight levels and availability of truck capacity or alternative means of transporting freight, and changes in relationships with existing truck, rail, ocean and air carriers; changes in our customer base due to possible consolidation among our customers; our ability to integrate the operations of acquired companies with our historic operations successfully; risks associated with litigation and insurance coverage; risks associated with operations outside of the U.S.; risks associated with the potential impacts of changes in government regulations; risks associated with the produce industry, including food safety and contamination issues; fuel prices and availability; the impact of war on the economy; and other risks and uncertainties detailed in our Annual and Quarterly Reports. 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, 2008, filed on February 27, 2009.

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, South America, Australia, and the Middle East. 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 50,000 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 providers. 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 primarily to add value and expertise in the procurement and execution of transportation and logistics, including sourcing of produce products for our customers. Our total revenues represent the total dollar value of services and goods we sell to our customers. Net revenues are our total revenues less purchased transportation and related services, including motor carrier, rail, ocean, air, and other costs, and the purchase price and services related to the products we source. Our net revenues 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 largely on the changes in our net revenues.

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. 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 so dynamic and market-driven.

Our branches work together to complete transactions and collectively meet the needs of our customers. Approximately 35 percent of our truckload shipments are 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.

During the second quarter of 2009, we increased the size of our branch network by two branches, to 233. We opened one new branch, combined two branches, and added two branches through our acquisition of Walker. We are planning limited branch openings through the remainder of 2009. 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, and to properly align our headcount and personnel expense with our business. Because of the significant reduction in overall transportation demand in the marketplace, in the first six months of 2009 some of our branches and corporate functions adjusted their staffing levels to better match our current level of business. Our headcount decreased by 649 employees during the first six months of 2009 compared to December 31, 2008. The majority of the headcount decrease occurred in the first quarter of 2009. We believe the personnel adjustments made during the period were appropriate to balance our current shipment volumes and workloads with our staffing levels, while leaving us with good resource flexibility to continue to aggressively sell and pursue market share in all of our services.

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 2008, we worked with approximately 32,000 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 2008, our top 100 customers represented approximately 30 percent of our total net revenues, and our largest customer was approximately three percent of our total net revenues.

Our Carriers. Our carrier base includes motor carriers, railroads (primarily intermodal service providers), air freight, and ocean carriers. In 2008, we increased our carrier base to approximately 50,000. While our volume with many of these providers may still be small, we believe the size of our contract carrier network shows that we are well positioned to continue to meet our customers' needs. Motor carriers that had fewer than 100 tractors transported approximately 75 percent of our truckload shipments in 2008. In our truckload business, no single carrier represents more than one percent of our carrier capacity.

Our Goals. Since we became a publicly-traded company in 1997, our long-term compounded annual growth target has been 15 percent for net revenues, income from operations, and earnings per share. This goal was based on an analysis of our performance in the previous 20 years, during which our compounded annual growth rate was 15 percent. Although there have been periods where we have not achieved these goals, since 1997, we have exceeded this compounded growth goal in all three categories.

Our expectation is that over time, we will continue to achieve our long-term target of 15 percent growth, but that we will have periods in which we exceed that goal and periods in which we fall short. We expect to reach our long-term growth primarily through internal growth but acquisitions that fit our growth criteria and culture may also augment our growth.

A prolonged environment of weak demand is the most challenging for us. In the second quarter of 2009, our consolidated total revenues decreased 17.0 percent due primarily to falling transportation rates, largely driven by a reduction in fuel prices, and volume declines in most of our transportation modes. Our net revenues grew 3.1 percent to $351.7 million. Our income from operations increased 3.7 percent to $149.9 million and our diluted earnings per share increased 3.8 percent to $0.54. Due to overall economic conditions and the significant decline in overall North American transportation volumes, we did not achieve our long-term growth goal of 15 percent during the second quarter of 2009. We had declines in most of our transportation modes in the second quarter of 2009. While our volume declines were partially offset by increased net revenue margins (net revenues as a percentage of total revenues) in the second quarter of 2009, over a longer period of time volume growth is necessary for us to reach our long-term growth goals. The environment remains unpredictable. Based on published industry freight indexes and reductions in overall economic activity and manufacturing production, 2009 has been and will continue to be very challenging for growth.

Results of Operations

The following table summarizes our total revenues by service line:



                                   Three Months Ended June 30,              Six Months Ended June 30,
                                                              %                                       %
                                   2009          2008       change         2009          2008       change
Revenues (in thousands)

Transportation                  $ 1,487,577   $ 1,927,354    -22.8 %    $ 2,806,103   $ 3,568,966    -21.4 %
Sourcing                            427,010       380,933     12.1 %        786,144       712,230     10.4 %
Information Services                 11,433        13,419    -14.8 %         21,773        25,722    -15.4 %

Total                           $ 1,926,020   $ 2,321,706    -17.0 %    $ 3,614,020   $ 4,306,918    -16.1 %

The following table sets forth our net revenue margins, or net revenues as a percentage of total revenues, between services and products:

                                  Three Months Ended         Six Months Ended
                                       June 30,                  June 30,
                                 2009           2008         2009         2008
         Transportation            20.6 %         15.4 %       21.5 %      16.7 %
         Sourcing                   8.0            8.0          8.2         8.1
         Information Services     100.0          100.0        100.0       100.0

         Total                     18.3 %         14.7 %       19.1 %      15.8 %

The following table summarizes our net revenues by service line:

                                     Three Months Ended June 30,               Six Months Ended June 30,
                                    2009         2008       % change         2009         2008       % change
Net revenues (in thousands)

Transportation:

Truck                            $  266,226    $ 252,204         5.6 %     $ 522,585    $ 511,527         2.2 %
Intermodal                            8,457       10,700       -21.0 %        18,258       19,878        -8.1 %
Ocean                                12,947       14,034        -7.7 %        27,174       26,289         3.4 %
Air                                   7,748        9,711       -20.2 %        15,085       17,761       -15.1 %
Miscellaneous                        10,845       10,833         0.1 %        20,815       20,700         0.6 %

Total transportation                306,223      297,482         2.9 %       603,917      596,155         1.3 %

Sourcing                             34,048       30,285        12.4 %        64,617       57,338        12.7 %
Information Services                 11,433       13,419       -14.8 %        21,773       25,722       -15.4 %

Total net revenues               $  351,704    $ 341,186         3.1 %     $ 690,307    $ 679,215         1.6 %

The following table represents certain statement of operations data, shown as percentages of our net revenues:

                                                         Three Months Ended           Six Months Ended
                                                              June 30,                    June 30,
                                                        2009           2008          2009          2008
Net revenues                                             100.0 %        100.0 %       100.0 %      100.0 %
Operating expenses
Personnel expenses                                        43.1           42.9          44.2         44.2
Other selling, general, and administrative expenses       14.2           14.7          14.2         14.5

Total operating expenses                                  57.4           57.6          58.4         58.7

Income from operations                                    42.6           42.4          41.6         41.3
Investment and other income                                0.2            0.5           0.2          0.6

Income before provision for income taxes                  42.8           42.9          41.8         41.9
Provision for income taxes                                16.6           16.4          16.1         15.9

Net income                                                26.2 %         26.5 %        25.7 %       26.0 %

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

Total revenues and direct costs. Our consolidated total revenues decreased 17.0 percent in the second quarter of 2009 compared to the second quarter of 2008. Total Transportation revenues declined 22.8 percent to $1.5 billion in the second quarter of 2009 from $1.9 billion in the second quarter of 2008. Total purchased transportation services declined 27.5 percent in the second quarter of 2009 to $1.2 billion from $1.6 billion in the second quarter of 2008. These declines were driven by falling transportation rates, due primarily to a reduction in fuel prices, and volume declines in most of our transportation modes. A significant decline in overall transportation market demand due to the economic recession impacted our volumes. Our Sourcing revenue increased 12.1 percent to $427.0 million in the second quarter of 2009. Purchased products sourced for resale increased 12.1 percent in the second quarter of 2009 to $393.0 million from $350.6 million in the second quarter of 2008. These increases were primarily due to volume growth. Our Information Services revenue decreased 14.8 percent to $11.4 million in the second quarter of 2009 from $13.4 million in the second quarter of 2008. The decrease was driven by declines in transactions and lower fuel prices.

Net revenues. Total Transportation net revenues increased 2.9 percent to $306.2 million in the second quarter of 2009 from $297.5 million in the second quarter of 2008. Our Transportation net revenue margin increased to 20.6 percent in 2009 from 15.4 percent in 2008 largely driven by a decline in fuel prices and a lower cost of capacity.

Our truck net revenues, which consist of truckload and less-than-truckload ("LTL") services, comprise approximately 76 percent of our total net revenues. Our truck net revenues increased 5.6 percent to $266.2 million in the second quarter of 2009 from $252.2 million in the second quarter of 2008. Our truckload volumes decreased approximately five percent. Excluding the estimated impacts of fuel, on average our truckload rates decreased approximately five percent in the second quarter of 2009. Our truckload net revenue margin increased due to lower fuel prices and lower cost of capacity. Consistent with past periods of falling transportation demand, our cost of capacity fell faster than our customer rates. Excluding the estimated impacts of fuel, our cost of truckload capacity decreased approximately 10 percent as carriers lowered their rates. During the second quarter of 2009, our LTL shipment volumes increased approximately 25 percent compared to the second quarter of 2008. Our LTL net revenue margin also increased slightly in the second quarter of 2009.

Our intermodal net revenue decrease of 21.0 percent to $8.5 million in the second quarter was driven largely by price declines, combined with slight volume decreases. Net revenue margin was relatively consistent with the second quarter of 2008.

Our ocean transportation net revenue decreased 7.7 percent to $12.9 million in the second quarter of 2009 driven by decreased volumes, partially offset by margin expansion. Excluding our previously disclosed acquisition of Transera International Holdings Ltd. ("Transera") on August 1, 2008 and Walker Logistics Overseas, Ltd. ("Walker") on June 12, 2009, our ocean transportation net revenues would have declined approximately 23 percent.

Our air transportation net revenue decrease of 20.2 percent to $7.7 million in the second quarter of 2009 was driven by decreased volumes, partially offset by the impact of the acquisitions of Transera and Walker, and increased net revenue margins. Excluding acquisitions, our air transportation net revenues decreased 26.5 percent.

For the second quarter, Sourcing net revenue increased 12.4 percent to $34.0 million in 2009 from $30.3 million in 2008. This increase was driven primarily by volume growth. Our margin remained at 8.0 percent in 2009. The increase in volume was driven by our continued success selling our value added products and services to our retail and food service customers.

Our Information Services net revenue decreased 14.8 percent in the second quarter of 2009 to $11.4 million. The decrease was driven primarily by declines in transactions. Lower fuel prices also impacted our growth, as some of our merchant fees are based on a percentage of the total sale amount.

Operating expenses. For the second quarter, operating expenses increased 2.6 percent to $201.8 million in 2009 from $196.7 million in 2008. This was due to an increase of 3.6 percent in personnel expenses and a decrease of 0.2 percent in other selling, general, and administrative expenses. As a percentage of net revenues, operating expenses decreased slightly to 57.4 percent in the second quarter of 2009 from 57.6 percent in the second quarter of 2008.

We strive to keep personnel expenses as variable as possible by having compensation plans that vary with net revenues and profitability. During the second quarter of 2009, personnel expenses grew at a similar rate as net revenue and income from operations. Our personnel expenses as a percentage of net revenue remained relatively consistent in the second quarter of 2009 at 43.1 percent compared to 42.9 percent in the second quarter of 2008.

For the second quarter, other selling, general, and administrative expenses decreased 0.2 percent to $50.1 million in 2009 from $50.2 million in 2008. We had increases in some expenses including provisions for doubtful accounts. These increases were offset by reductions in travel, entertainment, and other discretionary expenses.

Income from operations. Income from operations increased 3.7 percent to $149.9 million for the three months ended June 30, 2009. Income from operations as a percentage of net revenues was 42.6 percent and 42.4 percent for the three months ended June 30, 2009 and 2008.

Investment and other income. Investment and other income decreased 57.3 percent to $0.7 million for the three months ended June 30, 2009. Our investment income is down significantly compared to last year primarily due to the changes in the overall market yields on high-quality, short-term investments.

Provision for income taxes. Our effective income tax rate was 38.7 percent for the second quarter of 2009 and 38.2 percent for the second quarter of 2008. 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 2.0 percent to $92.3 million for the three months ended June 30, 2009. Basic net income per share was $0.55 and $0.53 for the three months ended June 30, 2009 and 2008. Diluted net income per share was $0.54 and $0.52 for the three months ended June 30, 2009 and 2008.

Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008

Total revenues and direct costs. Our consolidated total revenues decreased 16.1 percent for the six months ended June 30, 2009 compared to the six months ended June 20, 2008. Total Transportation revenues declined 21.4 percent to $2.8 billion in first six months of 2009 from $3.6 billion in the first six months of 2008. Total purchased transportation services declined 25.9 percent in the six months ended June 30, 2009 to $2.2 billion from $3.0 billion in the six months ended June 30, 2008. These declines were driven by falling transportation rates, due primarily to a reduction in fuel prices, and volume declines in most of our transportation modes. A significant decline in overall transportation market demand due to the economic recession impacted our volumes. Our Sourcing revenue increased 10.4 percent to $786.1 million in the six months ended June 30, 2009. Purchased products sourced for resale increased 10.2 percent in the six months ended June 30, 2009 to $721.5 million from $654.9 million in the six months ended June 30, 2008. These increases were primarily due to volume growth. Our Information Services revenue decreased 15.4 percent to $21.8 million in the six months ended June 30, 2009 from $25.7 million in the six months ended June 30, 2008. The decrease was driven by declines in transactions and lower fuel prices.

Net revenues. Total Transportation net revenues increased 1.3 percent to $603.9 million in the six months ended June 30, 2009 from $596.2 million in the six months ended June 30, 2008. Our Transportation net revenue margin increased to 21.5 percent in 2009 from 16.7 percent in 2008 largely driven by a decline in fuel prices and a lower cost of capacity.

Our truck net revenues, which consist of truckload and LTL services, comprise approximately 76 percent of our total net revenues. Our truck net revenues increased 2.2 percent to $522.6 million in the six months ended June 30, 2009 from $511.5 million in the six months ended June 30, 2008. Our truckload volumes decreased 7.5 percent. Our truckload rates decreased approximately 15 percent. Excluding the estimated impacts of fuel, on average our truckload rates decreased approximately three percent in the six months ended June 30, 2009. Our truckload net revenue margin increased due to lower fuel prices and lower cost of capacity. Consistent with past periods of falling transportation demand, our cost of capacity fell faster than our customer rates. Excluding the estimated impacts of fuel, our cost of truckload capacity decreased approximately seven percent as carriers lowered their rates. During the six months ended June 30, 2009, our LTL shipment volumes increased approximately 15 percent compared to the six months ended June 30, 2008. Our LTL net revenue margin also increased in the six months ended June 30, 2009.

Our intermodal net revenue decrease of 8.1 percent to $18.3 million in the six months ended June 30, 2009 was driven largely by price declines, combined with slight volume decreases. Net revenue margin also increased in the six months ended June 30, 2009.

Our ocean transportation net revenue increased 3.4 percent to $27.2 million in the six months ended June 30, 2009 driven by decreased volumes, partially offset by margin expansion. Excluding our previously disclosed acquisition of Transera on August 1, 2008 and Walker on June 12, 2009, our ocean transportation net revenues would have declined approximately 15.2 percent.

Our air transportation net revenue decrease of 15.1 percent to $15.1 million in the six months ended June 30, 2009 was driven by decreased volumes, partially offset by the impact of the acquisitions of Transera and Walker, and increased net revenue margins. Excluding acquisitions, our air transportation net revenues decreased 20.7 percent.

For the six months ended June 30, 2009, Sourcing net revenue increased 12.7 percent to $64.6 million in 2009 from $57.3 million in 2008. This increase was driven primarily by volume growth. Our margin increased slightly to 8.2 percent . . .