Marten Transport, Ltd.

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Marten Transport, Ltd.

129 Marten Street
Mondovi, Wisconsin 54755
U.S.A.
Telephone: (715) 926-4216
Toll Free: (800) 395-3000
Fax: (715) 926-5609
Web site: http://www.marten.com

Public Company
Incorporated: 1946
Employees: 2,440
Sales: $460.2 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: MRTN
NAIC: 484230 Specialized Freight (Except Used Goods) Trucking, Long-Distance

Marten Transport, Ltd., is a long-haul trucking company that concentrates on temperature-sensitive shipments of food and consumer packaged goods, operating in parts of Canada and throughout the United States. Based in Mondovi, Wisconsin, Marten mostly makes trips averaging 950 miles from the Midwest to the East Coast, Southeast, Southwest, and West Coast. In addition, the company's Ontario, California, terminal handles shipments to the Pacific Northwest. Other terminals are located in Wilsonville, Oregon; Indianapolis, Indiana; and Forest Park, Georgia. Customers include many Fortune 500 companies, such as General Mills, Kraft, and Procter & Gamble.

Marten's company-owned and independent contractor fleet is comprised of more than 2,600 tractors and 3,400 trailers. The company is known for the high quality of its equipment and a willingness to invest in state-of-the-art equipment, which includes an advanced satellite tracking system that helps Marten to not only keep tabs on the location of its trucks but also remotely monitor the temperature of the loads. In addition, Marten offers logistics services and works with customers to find ways to cut down on driver detention at loading docks. Customers that work with Marten to reduce those times are given price breaks, while others are subject to price increases. The company also operates its own video production unit to create promotion, safety, and training videos. While Marten is a public company listed on the NASDAQ, it remains family run and is known for its fair treatment of drivers and independent contractors, resulting in driver retention rates significantly higher than the industry average. Chairman and chief executive Randy Marten owns about one-quarter of the business, and his sister, Christine K. Marten, is the other large shareholder and a director of the company.

POST–WORLD WAR II ROOTS

Marten Transport was founded in Mondovi by 17-year-old Wisconsin native Roger R. Marten in 1946 when he borrowed $400 from his mother to buy a 1940 Chevrolet truck and begin hauling milk for the Modena Co-Op Creamery. A hard worker with an entrepreneurial spirit, Marten not only expanded his milk delivery routes, he bought and drove school buses. In 1956 he purchased his first tractor-trailer and began hauling petroleum products out of Durand, Wisconsin, for Bauer Built. He essentially doubled the size of his business in one stroke in 1959 by acquiring Mondovi Trucking Inc.

A turning point for Marten came in 1962 when the Land O'Lakes milk cooperative closed its drying operation in Mondovi, forcing the cooperative to haul milk produced in the area to other locations. Marten won the contract, added a pair of tractor-trailers, and enjoyed the fruits of what would become a long-term relationship between the two companies. Around this time, Marten looked to build on its success as a regional carrier and began taking on interstate jobs, at first serving Midwest customers that needed to make shipments to the West Coast. To support its growth the company opened a one-bay garage in Mondovi in 1965 to service the trucks, thus laying the foundation for Marten's first terminal. Dry vans were also purchased around this time to haul dry milk products.

It was also in 1965 that 13-year-old Randy Marten began working for his father. At first he washed trucks. He then took on other maintenance chores, such as changing oil and repairing tires. He also did some dispatch work, and when he was not busy at the terminal, he would go to his grandfather's farm to milk cows, bale hay, and cultivate corn. "I got to know what it was like to be real broke," he recalled in an interview with Heavy Duty Trucking. He continued, "I got to know what it was like to live with people who bet everything they had and worked 20 hours a day to make their company go. I was brought up with that." Randy Marten enrolled at the University of Wisconsin in Eau Claire, graduating in 1974 with a degree in business management. He immediately went to work for his father, who provided him with an MBA. "That stands for major boot in the ass in Wisconsin," Marten told Heavy Duty Trucking, noting that his father was forever telling him that he had no idea what really tough times were like, prompting the son to reply, "What do you want me to do, create a depression so I can have a hard time?" Nevertheless, the two worked well together in growing the family trucking business, with the younger man filling in wherever necessary, whether that meant calling on customers or driving a truck.

Two years before the younger Marten returned home from college, the company acquired six new trucks and expanded its long-distance milk hauling business, adding runs to the east to Ohio and Pennsylvania, and the southeast to Florida. In 1976 Marten moved beyond milk to become involved in the long-haul business for perishable foods using refrigerated trailers. This was accomplished through the acquisition of Winona, Minnesota-based Hiawatha Produce, laying the foundation for the company's current temperature-sensitive shipping business.

Because the company had been a shoestring affair in the beginning and could not afford the services of lawyers, Roger Marten did not seek operating authority to haul regulated commodities, nor did his company have the size to compete against the protective trucking outfits that had operating authority. As a result, Marten Transport made its way in what Randy Marten would call the jungle of unregulated trucking, but when deregulation of the trucking industry arrived in 1980, the company was well prepared to prosper under the new competitive conditions. As deregulation approached, Marten bought operating authority from other companies and jump-started the business. The hauler also benefitted from consolidation in the grocery field, which gave rise to large supermarket chains and the advent of warehouse clubs and other large discounters. Rather than being contracted to haul a few pallets, Marten could contract entire truckloads. Just to accommodate the needs of one customer, Marten bought 15 47-foot trailers in 1983. With business to the West Coast expanding, the company opened its Ontario, California, terminal in 1985.

IPO: 1986

As a way to support further growth, Marten went public in September 1986, selling $13 million in stock. Some of that money would be put to use the next year to install an Electronic Data Interchange system that allowed Marten to better exchange information with its high-volume customers. Randy Marten, who had been a director and vice president of the company since 1980, was named president of the newly public company, while his father remained very much involved as chairman of the board.

COMPANY PERSPECTIVES

With more than half a century of experience Marten Transport, Ltd., continues to push forward. The company has grown from a small, regional carrier into one of today's leading national protective service transportation companies.

The 1980s offered a strong period of growth for the company, with revenues increasing from $8.8 million in 1981 to $73.3 million in 1989. Marten tried to expand its dry transport business in the second half of the decade, but this strategy proved unwise and a drag on earnings. It was also a major factor in the company posting a $1.4 million loss in 1989. Marten exited the dry haul business, electing instead in 1989 to concentrate on the temperature-sensitive shipping business, which was generally immune to downturns in the economy. After all, whether times were good or bad, people still had to eat. The year 1989 also saw the opening of a terminal in Aurora, Oregon.

At the start of the 1990s Marten's fleet included some 600 tractors and 800 trailers. Although the price of the company's stock slipped, the company continued to grow revenues, which topped the $100 million mark in 1993. In the meantime, Roger Marten's health became a concern. In the fall of 1992 he became noticeably forgetful and began exhibiting troubling symptoms, soon losing control of movement and speech. He went to Reno, Nevada, for treatment, where he died in August 1993 at the age of 66. His death was attributed to Pick's disease, a rare brain disorder, but a decade later the circumstance of his death would come under question. One of Marten's hunting companions, with whom he enjoyed wild-game feasts, died of an even rarer brain disorder in 1993, Creutzfeldt-Jakob disease (CJD), which could easily be misdiagnosed as Pick's disease. When a third friend died of CJD six years later, rumors began to spread that there was a connection to the three deaths. All three men had shared venison that could have been affected by chronic wasting disease carried in Wisconsin deer. By 2002 the concern was so great that the U.S. Centers for Disease Control and Prevention believed the matter warranted an investigation. However, the agency eventually ruled that none of the men died of chronic wasting disease.

Randy Marten and his sister, Christine, inherited their father's share in the business, and Randy assumed the chairmanship in addition to his role as CEO. He oversaw the continued growth of the company. The corporate offices added 15,000 square feet of space in 1993, the same year that the Jonesboro, Georgia, terminal opened. He also continued to take steps to improve efficiency and thereby increase profitability. In particular, the company wanted to determine the complete time involved in completing a shipment, including load time, which is especially important when a shipping company uses expensive refrigerated trailers.

What was lacking in the effort to calculate the time was accurate live data. In 1993 Marten installed satellite tracking in all of its vehicles. Finally the company had all the information necessary, and once it was gathered and analyzed, Marten was able to approach customers with the data and offer to work with them to eliminate wasteful practices that cost both parties money, and penalized drivers who had to wait around instead of putting on miles and earning their pay. Although it took several years before Marten was able to iron out all the details in this logistical consulting business, it was worth the effort, despite the loss of some customers who resisted changing their practices. Eliminating detention time during delivery became a major factor in Marten's excellent record of driver retention, another factor that helped improved profitability.

Marten acquired an Oregon maintenance facility in 1995 to strengthen its presence in the Northwest. The company's fleet of tractors also topped the 1,000 mark. Business grew at a steady clip in the second half of the 1990s. Revenues totaled $137.7 million in 1995, with $5 million in net income. In 1999 those numbers improved to $219.2 million in sales and nearly $8.5 million in net income. All the while, Marten made significant investments in new equipment, continually modernizing the fleet, and installing new high-tech systems. In 1995 the company made the decision to begin using 53-foot trailers, and by the end of the 1990s almost all of the fleet had been converted and averaged just two years of age. The company-owned tractors were only 1.6 years old on average. In 1999 Marten spent $40 million in improvements, mostly related to equipment. Also in 1999, Marten installed a new optimization system to improve routing to supplement its satellite tracking systems, global positioning equipment, and networked computer systems.

KEY DATES

1946:: Roger Marten starts a delivery business.
1956:: Marten buys his first tractor-trailer.
1965:: The company's first terminal opens in Mondovi, Wisconsin.
1974:: Randy Marten joins the company full time.
1986:: The company goes public.
1993:: Roger Marten dies.
2002:: Bluebird Productions is established.
2004:: Marten's Indianapolis terminal opens.

NEW GEORGIA TERMINAL: 2000

In 2000 Marten relocated its Jonesboro, Georgia, terminal to a larger and better equipped facility in Forest Park, Georgia. For the year Marten invested nearly $46 million in upgrading the company, with most of the money again devoted to new revenue-producing equipment. Revenues continued to increase at a healthy pace, growing 19 percent to $260.8 million in 2000. Perhaps the most significant problem the company faced was finding enough qualified drivers, a situation confronting the trucking industry in general. Marten did better than most in this regard, by offering better than average terms and making a concerted effort to maintain good relationships with company drivers and private contractors.

Marten spent more money on high-tech equipment in 2001, adding video conferencing equipment in order to provide orientation, training, and seminars to drivers at its various terminal locations. A year later Marten launched Bluebird Products, an in-house video production unit stocked with the latest digital equipment and computer-based nonlinear editing systems, to produce the company's own training and promotional materials.

While many trucking companies suffered from a downturn in the economy in the early 2000s, Marten's focus on the temperature-sensitive business provided a buffer. The company had one of the highest equipment utilization levels in the industry, allowing it to continue to post revenue records each year. Sales reached $380 million in 2004 while net income improved to $17.5 million. The average age of the fleet also decreased, with the average age of tractor falling from 1.9 years at the start of the year to 1.4 years by the end. The year also saw another 11,000 square feet added to the corporate headquarters and the opening of new terminal in Indianapolis, a move that helped spur business in the region and aided the company in a bid to recruit drivers in the area. A driver shortage, in fact, was about the only thing slowing down Marten's growth. Nevertheless, the company again posted record results in 2005, when it generated $460.2 million in revenues and $25.1 million in earnings.

There was no third generation of the Marten family being groomed to one day take charge, because neither Randy Marten nor his sister had children. To prepare for the future, the company conducted a secondary offering of stock to put more shares in the public's hands. Randy Marten also took steps to make sure that all key positions in the company were well staffed, generally with people in their 50s and 60s in charge and backups in their 30s preparing for future responsibilities. Still in his early 50s, Randy Marten had no plans on retiring for some time to come.

Ed Dinger