Rising Costs Weigh Down Marten Transport’s Third-Quarter Results

Cost pressures sink Marten Transport’s Q3

Shares of refrigerated carrier Marten Transport fell about 7% in midday trading Friday after the company reported third-quarter earnings that fell short of Wall Street expectations. The result came despite signs that the truckload market is tightening and that pricing conditions are improving for carriers.

Marten, based in Mondovi, Wisconsin, reported net income of $2.9 million, or 4 cents per share, for the quarter. Earnings were up from 3 cents per share a year earlier but missed the consensus estimate by 2 cents.

The company said higher fuel, health insurance and driver-pay costs more than offset improvements in freight pricing and operating efficiency. Those cost increases were only partially balanced by a larger gain on the sale of revenue equipment.

Compared with Marten’s average quarterly expense levels during the first half of the year, net fuel costs increased by $3.5 million in the third quarter. Health insurance expenses, included in salaries, wages and benefits, rose by $2 million. Higher driver pay reduced results by another $1 million.

In total, the combination of higher fuel and payroll-related expenses, partially offset by equipment-sale gains, reduced net income by approximately $3.7 million, or 4.5 cents per share, according to the company.

Consolidated revenue was $223 million, up 1% from the year-ago period. The comparison was affected by Marten’s 2025 sale of its intermodal business to Hub Group, which created a $9.9 million revenue headwind in the quarter.

Truckload pricing improves, but margins remain thin

Marten’s one-way truckload operation produced $117 million in revenue, a 12% year-over-year increase. Excluding fuel surcharges, revenue increased 4%. Revenue per tractor per week, also excluding fuel, rose 15% while the fleet was 9% smaller.

The smaller fleet reflects Marten’s effort to improve asset utilization rather than add trucks into a market that has remained challenging for much of the freight cycle. Deadhead declined by 30 basis points from a year earlier to 10.7%, meaning a slightly smaller share of the company’s miles were run without a loaded trailer.

Revenue per loaded mile, excluding fuel, increased 14% to $3.02. Those figures point to better pricing and improved freight selection. However, the truckload unit still operated at a 100.2% operating ratio excluding fuel, meaning its operating costs exceeded revenue on that basis.

The ratio was 200 basis points better than a year earlier but deteriorated by 280 basis points from the second quarter. For drivers and fleet managers, the result illustrates how stronger linehaul rates can still be overwhelmed by expenses such as fuel, wages, insurance, maintenance and equipment costs.

“The truckload freight market has sharply tightened since earlier this year as renewed and enhanced enforcement of federal and state law is removing a meaningful amount of noncompliant and unqualified driver capacity from the marketplace,” Chairman and CEO Randy Marten said in a news release.

Marten said it is securing higher pricing from customers for its premium services while improving freight quality across its network. The company described those changes as occurring during the early stages of a freight-market upcycle.

Dedicated operations weaken

The company’s dedicated operation moved in the opposite direction. Revenue excluding fuel declined 9% year over year as the dedicated truck count fell 11%. A 2% increase in revenue per tractor was not enough to offset the smaller fleet.

Revenue per loaded mile, excluding fuel, declined 2% to $2.41. The segment posted a 97.6% operating ratio excluding fuel, 360 basis points worse than a year earlier and 220 basis points worse sequentially.

Brokerage revenue was flat at $39 million. Shipments fell 15%, but revenue per load increased 17%, leaving the brokerage unit with a 94.8% operating ratio. That was an improvement of 110 basis points from the year-ago quarter and unchanged from the second quarter.

Cash position remains strong

Marten generated $83 million in cash from operations during the first nine months of the year, down 5% from the same period a year earlier. The company maintained a debt-free balance sheet during the period.

The average age of its tractor fleet was 2.5 years, compared with 2.2 years in the year-ago quarter. A slightly older fleet can help limit replacement spending, although it can also bring higher maintenance and operating costs as equipment ages.

Marten’s results matter beyond the company itself because it is widely viewed as a refrigerated-trucking pure play. As the only publicly traded carrier focused primarily on the reefer market, its results provide a useful indicator of conditions affecting temperature-controlled freight.

The quarter showed a market with improving freight fundamentals but continuing cost pressure. Better rates, lower deadhead and higher revenue per tractor helped Marten’s operating performance. At the same time, fuel, health insurance and driver compensation absorbed much of that improvement, leaving the company with earnings below expectations and an unprofitable truckload operation on an excluding-fuel basis.