REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

We adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, as of January 1, 2018 using the modified retrospective transition method. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a customer contract are satisfied which changed the timing of revenue recognition for our transportation business from at delivery to over the transit period as our performance obligations are completed. The comparative information for the year ended December 31, 2017 has not been restated and continues to be reported under ASC 605, Revenue Recognition.

The impact of adoption of ASU 2014-09 on our consolidated statements of operations for the years ended December 31, 2019 and 2018, was as follows (dollars in thousands).


	Twelve Months Ended December 31, 2019
	As reported		Balances without adoption of ASU 2014-09		Effect of change higher / (lower)
Income Statement
Revenues:
Transportation	$	14,322,295	$	14,336,820	$	(14,525)
Sourcing ⁽¹⁾	987,213		1,128,208		(140,995)
Total revenues	15,309,508		15,465,028		(155,520)
Costs and expenses:
Purchased transportation and related services	11,839,433		11,848,665		(9,232)
Purchased products sourced for resale ⁽¹⁾	883,765		1,024,760		(140,995)
Personnel expenses	1,298,528		1,299,087		(559)
Other selling, general, and administrative expenses	497,806		497,806		—
Total costs and expenses	14,519,532		14,670,318		(150,786)
Income from operations	789,976		794,710		(4,734)
Interest and other expense	(47,719)		(47,719)		—
Income before provision for income taxes	742,257		746,991		(4,734)
Provision for income taxes	165,289		166,502		(1,213)
Net income	$	576,968	$	580,489	$	(3,521)

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⁽¹⁾We have identified certain customer contracts in our sourcing managed procurement business that changed from a principal to an agent relationship under the new standard. This change resulted in these contracts being recognized at the net amount we charge our customers but had no impact on income from operations.


	Twelve Months Ended December 31, 2018
	As reported		Balances without adoption of ASU 2014-09		Effect of change higher / (lower)
Income Statement
Revenues:
Transportation	$	15,515,921	$	15,462,328	$	53,593
Sourcing ⁽¹⁾	1,115,251		1,235,713		(120,462)
Total revenues	16,631,172		16,698,041		(66,869)
Costs and expenses:
Purchased transportation and related services	12,922,177		12,875,875		46,302
Purchased products sourced for resale ⁽¹⁾	1,003,760		1,124,222		(120,462)
Personnel expenses	1,343,542		1,343,159		383
Other selling, general, and administrative expenses	449,610		449,610		—
Total costs and expenses	15,719,089		15,792,866		(73,777)
Income from operations	912,083		905,175		6,908
Interest and other expense	(31,810)		(31,810)		—
Income before provision for income taxes	880,273		873,365		6,908
Provision for income taxes	215,768		213,882		1,886
Net income	$	664,505	$	659,483	$	5,022

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We typically do not receive consideration and amounts are not due from our customer prior to the completion of our performance obligations and as such contract liabilities as of December 31, 2019 and 2018, and revenue recognized in the twelve months ended December 31, 2019 and 2018, resulting from contract liabilities were not significant. Contract assets and accrued expenses - transportation expense fluctuate from period to period primarily based upon shipments in-transit at period and the timing of customer invoicing.

A summary of our total revenues disaggregated by major service line and timing of revenue recognition is presented below for each of our reportable segments for the twelve months ended December 31, 2019 and 2018, as follows (dollars in thousands):


	Twelve Months Ended December 31, 2019
	NAST		Global Forwarding		All Other and Corporate		Total
Major service lines:
Transportation and logistics services⁽¹⁾	$	11,283,692	$	2,327,913	$	710,690	$	14,322,295
Sourcing⁽²⁾	—		—		987,213		987,213
Total	$	11,283,692	$	2,327,913	$	1,697,903	$	15,309,508

	Twelve Months Ended December 31, 2018
	NAST		Global Forwarding		All Other and Corporate		Total
Major service lines:
Transportation and logistics services⁽¹⁾	$	12,346,757	$	2,487,744	$	681,420	$	15,515,921
Sourcing⁽²⁾	—		—		1,115,251		1,115,251
Total	$	12,346,757	$	2,487,744	$	1,796,671	$	16,631,172

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⁽¹⁾Transportation and logistics services performance obligations are completed over time.

⁽²⁾Sourcing performance obligations are completed at a point in time.

Approximately 92 percent and 91 percent of our total revenues for the twelve months ended December 31, 2019 and 2018, respectively, are attributable to arranging for the transportation of our customers’ freight for which we transfer control and satisfy our performance obligation over the requisite transit period. A days in transit output method is used to measure the progress of our performance as of the reporting date. We determine the transit period based upon the departure date and the delivery date, which may be estimated if delivery has not occurred as of the reporting date. Determining the transit period and how much of it has been completed as of the reporting date may require management to make judgments that affect the timing of revenue recognized. We have determined that revenue recognition over the transit period provides a faithful depiction of the transfer of goods and services to our customer as our obligation is performed over the transit period. The transaction price for our performance obligation under these arrangements is generally fixed and readily determinable upon contract inception and is not contingent upon the occurrence or non-occurrence of another event.

Approximately six percent and seven percent of our total revenues for the twelve months ended December 31, 2019 and 2018, respectively, are attributable to buying, selling, and/or marketing of produce including fresh fruits, vegetables, and other value-added perishable items. Total revenues for these transactions are recognized at a point in time upon completion of our performance obligation, which is generally when the produce is received by our customer. The transaction price for our performance obligation under these arrangements is generally fixed and readily determinable upon contract inception and is not contingent upon the occurrence or non-occurrence of another event.

Approximately two percent of our total revenues for the twelve months ended December 31, 2019 and 2018, respectively, are attributable to value-added logistics services, such as customs brokerage, fee-based managed services, warehousing services, small parcel, and supply chain consulting and optimization services. Total revenues for these services are recognized over time as we complete our performance obligation. Transaction price is determined and allocated to these performance obligations at their fixed fee or agreed upon rate multiplied by their associated measure of progress, which may be transactional volumes, labor hours, or time elapsed.

Practical Expedients - Upon the adoption of ASU 2014-09, we have determined that we qualify for certain practical expedients to facilitate the adoption of the standard. We have elected to expense incremental costs of obtaining customer contracts (i.e., sales commissions) due to the short duration of our arrangements as the amortization period of such amounts is expected to be less than one year. These amounts are included within personnel expenses in our consolidated statements of operations and comprehensive income. In addition, we do not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the period, as our contracts have an expected length of one year or less. Finally, for certain of our performance obligations such as fee-based managed services, supply chain consulting and optimization services, and warehousing services, we have recognized revenue in the amount for which we have the right to invoice our customer as we have determined this amount corresponds directly with the value provided to the customer for our performance completed to date.