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What changed in MARTEN TRANSPORT LTD's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MARTEN TRANSPORT LTD's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+173 added−169 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)

Top changes in MARTEN TRANSPORT LTD's 2023 10-K

173 paragraphs added · 169 removed · 147 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

31 edited+0 added−0 removed39 unchanged
Biggest changeWe actively manage our fuel costs by purchasing fuel in bulk in Mondovi, Wisconsin and at a number of our other maintenance facilities throughout the country and have volume purchasing arrangements with national fuel centers that allow our drivers to purchase fuel at a discount while in transit.
Biggest changeWe actively manage our fuel costs by purchasing fuel in bulk at a number of our facilities throughout the country and have volume purchasing arrangements with national fuel centers that allow our drivers to purchase fuel at a discount while in transit. During 2023, nearly 100% of our fuel purchases were made at these designated locations.
Our Intermodal segment transports our customers’ freight within the United States utilizing our refrigerated containers and our temperature-controlled trailers, each on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers. 1 Our Brokerage segment develops contractual relationships with and arranges for third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans within the United States and into and out of Mexico through Marten Transport Logistics, LLC, which was established in 2007 and operates pursuant to brokerage authority granted by the United States Department of Transportation, or DOT.
Our Intermodal segment transports our customers’ freight within the United States utilizing our refrigerated containers on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers. 1 Our Brokerage segment develops contractual relationships with and arranges for third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans within the United States and into and out of Mexico through Marten Transport Logistics, LLC, which was established in 2007 and operates pursuant to brokerage authority granted by the United States Department of Transportation, or DOT.
These fuel surcharges, which adjust with the cost of fuel, enable us to recover a substantial portion of the higher cost of fuel as prices increase, except for non-revenue miles, out-of-route miles or fuel used while the tractor is idling. As of December 31, 2022, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.
These fuel surcharges, which adjust with the cost of fuel, enable us to recover a substantial portion of the higher cost of fuel as prices increase, except for non-revenue miles, out-of-route miles or fuel used while the tractor is idling. As of December 31, 2023, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.
With our fleet of 3,660 company and independent contractor tractors, we offer service levels that include up to 99% on-time performance and delivery within the narrow time windows often required when shipping perishable commodities. We have four reporting segments – Truckload, Dedicated, Intermodal and Brokerage.
With our fleet of 3,349 company and independent contractor tractors, we offer service levels that include up to 99% on-time performance and delivery within the narrow time windows often required when shipping perishable commodities. We have four reporting segments – Truckload, Dedicated, Intermodal and Brokerage.
Our marketing efforts are conducted by a staff of 292 sales, customer service and support personnel under the supervision of our senior management team. Marketing personnel travel within their regions to solicit new customers and maintain contact with existing customers. Customer service managers regularly contact customers to solicit additional business on a load-by-load basis.
Our marketing efforts are conducted by a staff of 290 sales, customer service and support personnel under the supervision of our senior management team. Marketing personnel travel within their regions to solicit new customers and maintain contact with existing customers. Customer service managers regularly contact customers to solicit additional business on a load-by-load basis.
Financial information regarding these segments can be found in Footnote 15 to the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K. Our Truckload segment provides a combination of regional short-haul and medium-to-long-haul full-load transportation services.
Financial information regarding these segments can be found in Footnote 14 to the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K. Our Truckload segment provides a combination of regional short-haul and medium-to-long-haul full-load transportation services.
We target food and consumer packaged goods companies whose products require temperature-sensitive services and who ship multiple truckloads per week. By emphasizing high-quality service, we seek to become a core carrier for our customers. In 2022, our largest customer was Walmart.
We target food and consumer packaged goods companies whose products require temperature-sensitive services and who ship multiple truckloads per week. By emphasizing high-quality service, we seek to become a core carrier for our customers. In 2023, our largest customer was Walmart.
We sponsor a wellness program designed to enhance the well-being of all our employees. The COVID-19 pandemic has also heightened our responsibility of ensuring our employees have a safe work environment and we have implemented numerous efforts to keep our valued employees safe, healthy and informed.
We sponsor a wellness program designed to enhance the well-being of each of our employees. The COVID-19 pandemic has also heightened our responsibility of ensuring our employees have a safe work environment and we have implemented numerous efforts to keep our valued employees safe, healthy and informed.
Approximately 58% of our Truckload and Dedicated revenue in 2022 resulted from hauling temperature-sensitive products and 42% from hauling dry freight. We operate throughout the United States and in parts of Mexico and Canada, with our revenue primarily generated from within the United States.
Approximately 58% of our Truckload and Dedicated revenue in 2023 resulted from hauling temperature-sensitive products and 42% from hauling dry freight. We operate throughout the United States and in parts of Mexico and Canada, with our revenue primarily generated from within the United States.
In 2010, our top 30 customers accounted for approximately 78% of our revenue. Seven of our top ten customers have been significant customers of ours for the last ten years. We believe we are the largest or second largest temperature-sensitive carrier for five of our top ten customers.
In 2010, our top 30 customers accounted for approximately 78% of our revenue. Nine of our top ten customers have been significant customers of ours for the last ten years. We believe we are the largest or second largest temperature-sensitive carrier for seven of our top ten customers.
We have also invested in satellite tracking equipment for the temperature-control units on our trailers that has improved fuel usage through management of required temperature settings and run time of the units. We further manage our exposure to changes in fuel prices through fuel surcharge programs with our customers and other measures that we have implemented.
We have also invested in terrestrial-based tracking equipment for the temperature-control units on our trailers that has improved fuel usage through management of required temperature settings and run time of the units. We further manage our exposure to changes in fuel prices through fuel surcharge programs with our customers and other measures that we have implemented.
Carriers using automatic on-board recording devices, or AOBRD’s, which were installed and in use prior to December 2017 were allowed until December 2019 to convert to ELD’s. Our entire fleet has been equipped with AOBRD’s since early 2011 and converted to ELD’s prior to December 2019.
Carriers using automatic on-board recording devices, or AOBRD’s, which were installed and in use prior to December 2017 were allowed until December 2019 to convert to ELD’s. Our entire fleet was equipped with AOBRD’s since early 2011 and converted to ELD’s prior to December 2019.
We provide regional truckload carrier services in the Southeast, West Coast, Midwest, South Central and Northeast regions. Our primary medium-to-long-haul traffic lanes are between the Midwest and the West Coast, Southwest, Southeast, and the East Coast, as well as from California to the Pacific Northwest. In 2022, our average length of haul was 412 miles.
We provide regional truckload carrier services in the Southeast, West Coast, Midwest, South Central and Northeast regions. Our primary medium-to-long-haul traffic lanes are between the Midwest and the West Coast, Southwest, Southeast, and the East Coast, as well as from California to the Pacific Northwest. In 2023, our average length of haul was 414 miles.
We believe our relationships with these key customers are sound, but we are dependent upon them and the loss of some or all of their business could have a materially adverse effect on our results. Human Capital As of December 31, 2022, we had 4,575 employees.
We believe our relationships with these key customers are sound, but we are dependent upon them and the loss of some or all of their business could have a materially adverse effect on our results. Human Capital As of December 31, 2023, we had 4,213 employees.
ITEM 1. BUSINESS Overview We have strategically transitioned from a refrigerated long-haul carrier to a multifaceted business offering a network of refrigerated and dry truck-based transportation capabilities across our five distinct business platforms – Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico.
ITEM 1. BUSINESS Overview We have strategically transitioned from a refrigerated long-haul carrier to a multifaceted business offering a network of time and temperature-sensitive and dry truck-based transportation and distribution capabilities across our five distinct business platforms – Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico.
We are one of the leading temperature-sensitive truckload carriers in the United States, specializing in transporting and distributing food and other consumer packaged goods that require a temperature-controlled or insulated environment. In 2022, we generated $1.264 billion in operating revenue.
We are one of the leading temperature-sensitive truckload carriers in the United States, specializing in transporting and distributing food and other consumer packaged goods that require a temperature-controlled or insulated environment. In 2023, we generated $1.131 billion in operating revenue.
Competition in the trucking industry for qualified drivers is normally intense and has increased. Our operations have been impacted, and from time-to-time we have experienced under-utilization and increased expense, as a result of a shortage of qualified drivers.
Competition in the trucking industry for qualified drivers is normally intense and has increased. Our operations have been impacted by, and from time-to-time we have experienced under-utilization and increased expense relating to, a shortage of qualified drivers.
We are also subject to various environmental laws and regulations dealing with the handling of hazardous materials, fuel storage tanks, air emissions from our facilities, engine idling, and discharge and retention of storm water. These regulations did not have a significant impact on our operations or financial results in 2020 through 2022.
We are also subject to various environmental laws and regulations dealing with vehicle emissions and idling, the handling of hazardous materials, fuel storage tanks, air emissions from our facilities and discharge and retention of storm water. These regulations did not have a significant impact on our operations or financial results in 2021 through 2023.
Independent contractors own their own tractors and are responsible for all associated expenses, including financing costs, fuel, maintenance, insurance, and taxes. The percentage of our fleet provided by independent contractors was 2.6% at December 31, 2022, 2.9% at December 31, 2021 and 4.3% at December 31, 2020.
Independent contractors own their own tractors and are responsible for all associated expenses, including financing costs, fuel, maintenance, insurance and taxes. The percentage of our fleet provided by independent contractors was 2.8% at December 31, 2023, 2.6% at December 31, 2022 and 2.9% at December 31, 2021.
We periodically evaluate and adjust our insurance and claims reserves to reflect our experience. We have $16.1 million in standby letters of credit to guarantee settlement of claims under agreements with our insurance carriers and regulatory authorities.
We periodically evaluate and adjust our insurance and claims reserves to reflect our experience. We have $20.7 million in standby letters of credit to guarantee settlement of claims under agreements with our insurance carriers and regulatory authorities.
In September 2020, the United States Department of Health and Human Services proposed mandatory guidelines for federal workplace drug testing programs using hair follicles, which is a more strenuous test than current requirements.
In September 2020, the United States Department of Health and Human Services proposed mandatory guidelines for federal workplace drug testing programs using hair follicles, which is a more strenuous test than current requirements. The FMCSA has not issued proposed regulations.
For example, we produced a non-revenue mile percentage of 6.4% during 2022, which points to the efficiency of our operations and we believe compares favorably to other temperature-sensitive and dry van trucking companies. Major Customers A significant portion of our revenue is generated from our major customers.
For example, we produced a non-revenue mile percentage of 7.3% during 2023, which points to the efficiency of our operations and we believe compares favorably to other temperature-sensitive and dry van trucking companies. Major Customers A significant portion of our revenue is generated from our major customers.
We have been testing at a rate in excess of 50%, including when the requirement was at least 25%, and tested 55% in each of 2020 and 2021 and 57% in 2022. The impact of the clearinghouse has been significant, with a total of approximately 120,000 drivers removed from the trucking industry in 2020 through 2022.
We have been testing at a rate in excess of 50%, including when the requirement was at least 25%, and tested 55% in 2021, 57% in 2022 and 67% in 2023. The impact of the clearinghouse has been significant, with a total of approximately 158,000 drivers removed from the trucking industry from January 2020 through December 2023.
This total consists of 3,577 drivers, 330 mechanics and maintenance personnel, and 668 support personnel, which includes management and administration. As of that date, we also contracted with 96 independent contractors. None of our employees are represented by a collective bargaining unit. We consider relations with our employees to be good.
This total consists of 3,256 drivers, 303 mechanics and maintenance personnel, and 654 support personnel, which includes management and administration. As of that date, we also contracted with 94 independent contractors. None of our employees are represented by a collective bargaining unit. We consider relations with our employees to be good.
In 2022, our top 30 customers accounted for approximately 68% of our revenue excluding fuel surcharges, and our top ten customers accounted for 45% of our revenue. We have emphasized increasing our customer diversity which is shown by the decrease in the portion of our revenue with our top customers.
In 2023, our top 30 customers accounted for approximately 69% of our revenue excluding fuel surcharges, and our top ten customers accounted for 47% of our revenue. We have emphasized increasing our customer diversity which is shown by the decrease in the portion of our revenue with our top customers.
In 2022, we replaced our company-owned trailers within an average of 6.7 years after purchase. As of December 31, 2022, we operated a fleet of 802 refrigerated containers for use on railroad flatcars as compared to a fleet of 634 refrigerated containers as of December 31, 2021.
In 2023, we replaced our company-owned trailers within an average of 8.0 years after purchase. As of December 31, 2023, we operated a fleet of 787 refrigerated containers for use on railroad flatcars as compared to a fleet of 802 refrigerated containers as of December 31, 2022.
As of December 31, 2022, we operated a fleet of 5,753 trailers, consisting of 3,541 refrigerated trailers and 2,212 dry vans. Most of our refrigerated trailers are equipped with Thermo-King refrigeration units, air ride suspensions, and anti-lock brakes. The average age of our trailer fleet at December 31, 2022 was approximately 3.9 years.
As of December 31, 2023, we operated a fleet of 5,653 trailers, consisting of 3,347 refrigerated trailers and 2,306 dry vans. Most of our refrigerated trailers are equipped with Thermo-King refrigeration units, air ride suspensions and anti-lock brakes. The average age of our trailer fleet at December 31, 2023 was approximately 4.6 years.
As of December 31, 2022, we operated a fleet of 3,660 tractors, including 3,564 company-owned tractors and 96 tractors supplied by independent contractors. The average age of our company-owned tractor fleet at December 31, 2022 was approximately 1.7 years. In 2022, we replaced our company-owned tractors within an average of 3.9 years after purchase.
As of December 31, 2023, we operated a fleet of 3,349 tractors, including 3,255 company-owned tractors and 94 tractors supplied by independent contractors. The average age of our company-owned tractor fleet at December 31, 2023 was approximately 1.9 years. In 2023, we replaced our company-owned tractors within an average of 4.1 years after purchase.
During 2022, nearly 100% of our fuel purchases were made at these designated locations. To help further reduce fuel consumption, we have equipped our company-owned tractors with auxiliary power units since 2007. These units reduce fuel consumption by providing quiet climate control and electrical power for our drivers without idling the tractor engine.
To help further reduce fuel consumption, we have equipped our company-owned tractors with auxiliary power units since 2007. These units reduce fuel consumption by providing quiet climate control and electrical power for our drivers without idling the tractor engine.
CSA’s Motor Carrier Safety Measurement System replaced the former SafeStat system and has removed a number of drivers from the industry as carriers are less willing to hire and retain drivers with marginal ratings, which has increased competition for qualified drivers. The FMCSA issued final revisions to the hours-of-service requirements for drivers in September 2020.
CSA’s Motor Carrier Safety Measurement System replaced the former SafeStat system and has removed a number of drivers from the industry as carriers are less willing to hire and retain drivers with marginal ratings, which has increased competition for qualified drivers. The FMCSA is currently considering possible changes to the agency’s safety and fitness regulations.
The revisions allow drivers more flexibility with their 30-minute rest breaks and with dividing their time in the sleeper berth.
The FMCSA issued final revisions to the hours-of-service requirements for drivers in September 2020. The revisions allow drivers more flexibility with their 30-minute rest breaks and with dividing their time in the sleeper berth.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

26 edited+10 added−3 removed71 unchanged
Biggest changeAt the same time, operating expenses generally increase, with harsh weather creating higher accident frequency, increased claims and more equipment repairs. We can also suffer short-term impacts from weather-related events such as hurricanes, blizzards, ice-storms, and floods that could harm our results or make our results more volatile.
Biggest changeWe can also suffer short-term impacts from weather-related events such as hurricanes, blizzards, ice-storms and floods that could harm our results or make our results more volatile. 9 We are subject to risks associated with public health crises, such as pandemics and epidemics, including the COVID-19 pandemic, which could negatively impact our business and results of operations.
We cannot predict whether, or in what form, any such increase applicable to us will be enacted, but such an increase could adversely affect our profitability. Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties .
We cannot predict whether, or in what form, any such increase applicable to us will be enacted, but such an increase could adversely affect our profitability. 11 Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties .
An increase in our expenses or in the number of tractors without drivers could materially and adversely affect our growth and profitability. 11 If we are unable to retain our executive officers and key management employees, our business, financial condition and results of operations could be adversely affected.
An increase in our expenses or in the number of tractors without drivers could materially and adversely affect our growth and profitability. If we are unable to retain our executive officers and key management employees, our business, financial condition and results of operations could be adversely affected.
In addition, hiring, training, and successfully integrating replacement personnel, whether internal or external, could be time consuming, may cause additional disruptions to our operations, and may be unsuccessful, which could negatively impact our business, financial condition and results of operations.
In addition, hiring, training and successfully integrating replacement personnel, whether internal or external, could be time consuming, may cause additional disruptions to our operations and may be unsuccessful, which could negatively impact our business, financial condition and results of operations. 12
Our company drivers and independent contractors also must comply with the safety and fitness regulations promulgated by the DOT, including those relating to drug and alcohol testing, medical and continuous training qualification and hours-of-service. We also may become subject to new or more restrictive regulations relating to fuel emissions, ergonomics, or other matters affecting safety or operating methods.
Our company drivers and independent contractors also must comply with the safety and fitness regulations promulgated by the DOT, including those relating to drug and alcohol testing, medical and continuous training qualification and hours-of-service. We also may become subject to new or more restrictive regulations relating to vehicle emissions, ergonomics or other matters affecting safety or operating methods.
We have been subject to cyberattacks, which have yet to have a material impact on our business or results of operations, but this might not always be the case in the future. For example, as previously reported, in October 2021, we detected a cyberattack that accessed and encrypted files utilized by us in the provision of our business.
We have been subject to cyberattacks, which have yet to have a material impact on our business or results of operations, but this might not always be the case in the future. For example, as previously reported, in October 2021, we detected a cyberattack that accessed and encrypted files utilized by us in the operation of our business.
There can be no assurance that we will be able to collect fuel surcharges, enter into volume purchase agreements, or execute successful hedges in the future. Additionally, we may encounter decreases in productivity that may offset or eliminate savings from auxiliary power units or satellite tracking equipment, or we may incur unexpected maintenance or other costs associated with such units.
There can be no assurance that we will be able to collect fuel surcharges, enter into volume purchase agreements or execute successful hedges in the future. Additionally, we may encounter decreases in productivity that may offset or eliminate savings from auxiliary power units or terrestrial-based tracking equipment, or we may incur unexpected maintenance or other costs associated with such units.
We are subject to various environmental laws and regulations dealing with the handling of hazardous materials, fuel storage tanks, air emissions from our vehicles and facilities, engine idling, and discharge and retention of storm water. We operate in industrial areas, where truck terminals and other industrial activities are located, and where groundwater or other forms of environmental contamination have occurred.
We are subject to various environmental laws and regulations dealing with vehicle emissions and idling, the handling of hazardous materials, fuel storage tanks, air emissions from our facilities and discharge and retention of storm water. We operate in industrial areas, where truck terminals and other industrial activities are located, and where groundwater or other forms of environmental contamination have occurred.
To the extent we experience claims that are uninsured, exceed our coverage limits or cause increases in future premiums, the resulting expense could have a materially adverse effect on our business and operating results. Risks Related to Company ’ s Human Capital Increases in compensation or difficulty in attracting drivers could affect our profitability and ability to grow .
To the extent we experience claims that are uninsured, exceed our coverage limits or cause increases in future premiums, the resulting expense could have a materially adverse effect on our business and operating results. Risks Related to Our Human Capital Increases in compensation or difficulty in attracting drivers could affect our profitability and ability to grow .
We depend primarily on fuel surcharges, auxiliary power units for our tractors, satellite tracking equipment for the temperature-control units on our trailers, volume purchasing arrangements with truck stop chains and bulk purchases of fuel at our terminals to control and recover our fuel expenses.
We depend primarily on fuel surcharges, auxiliary power units for our tractors, terrestrial-based tracking equipment for the temperature-control units on our trailers, volume purchasing arrangements with truck stop chains and bulk purchases of fuel at our terminals to control and recover our fuel expenses.
Risks Related to Company ’ s Industry and Operations Our business is subject to general economic and business factors that are largely beyond our control, any of which could have a materially adverse effect on our operating results .
Risks Related to Our Industry and Operations Our business is subject to general economic and business factors that are largely beyond our control, any of which could have a materially adverse effect on our operating results .
The outcome of litigation is difficult to assess or quantify, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. The cost to defend litigation may also be significant.
The outcome of litigation, particularly class action lawsuits, is difficult to assess or quantify, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. The cost to defend litigation may also be significant.
In September 2020, the United States Department of Health and Human Services proposed mandatory guidelines for federal workplace drug testing programs using hair follicles, which is a more strenuous test than the current requirements. From time to time, various federal, state, or local taxes are increased, including taxes on fuels.
In September 2020, the United States Department of Health and Human Services proposed mandatory guidelines for federal workplace drug testing programs using hair follicles, which is a more strenuous test than the current requirements. The FMCSA has not yet issued proposed regulations. From time to time, various federal, state or local taxes are increased, including taxes on fuels.
We have been testing at a rate in excess of 50%, including when the requirement was at least 25%, and tested 55% in each of 2020 and 2021 and 57% in 2022. The impact of the clearinghouse has been significant, with a total of approximately 120,000 drivers removed from the trucking industry in 2020 through 2022.
We have been testing at a rate in excess of 50%, including when the requirement was at least 25%, and tested 55% in 2021, 57% in 2022 and 67% in 2023. The impact of the clearinghouse has been significant, with a total of approximately 158,000 drivers removed from the trucking industry from January 2020 through December 2023.
Also effective in January 2020, all carriers must perform random drug tests at a rate of at least 50% of the average number of driver positions. The rate was at least 25% previously.
All testing violations must also be reported to the clearinghouse. Also effective in January 2020, all carriers must perform random drug tests at a rate of at least 50% of the average number of driver positions. The rate was at least 25% previously.
Although transportation services have been generally considered essential services and the overall demand for our services has continued throughout the pandemic, we did experience significant changes in demand from certain customers in certain freight lanes earlier in the pandemic.
The future impact of the pandemic continues to be an unknown. Although transportation services have been generally considered essential services and the overall demand for our services has continued throughout the pandemic, we did experience significant changes in demand from certain customers in certain freight lanes earlier in the pandemic.
We may need to incur indebtedness, which may include drawing on our credit facility, or issue debt securities in the future to fund working capital requirements, make investments, or for general corporate purposes. Additionally, stresses in the credit market causes uncertainty in the equity markets, which may result in volatility of the market price for our securities.
We may need to incur indebtedness, which may include drawing on our credit facility, or issue debt securities in the future to fund working capital requirements, make investments or for general corporate purposes.
Carriers using automatic on-board recording devices, or AOBRD’s, which were installed and in use prior to December 2017 were allowed until December 2019 to convert to ELD’s.
Carriers using automatic on-board recording devices, or AOBRD’s, which were installed and in use prior to December 2017 were allowed until December 2019 to convert to ELD’s. Our entire fleet was equipped with AOBRD’s since early 2011 and converted to ELD’s prior to December 2019.
CSA’s Motor Carrier Safety Measurement System replaced the former SafeStat system and has removed a number of drivers from the industry as carriers are less willing to hire and retain drivers with marginal ratings, which has increased competition for qualified drivers. The FMCSA issued final revisions to the hours-of-service requirements for drivers in September 2020.
CSA’s Motor Carrier Safety Measurement System replaced the former SafeStat system and has removed a number of drivers from the industry as carriers are less willing to hire and retain drivers with marginal ratings, which has increased competition for qualified drivers. The FMCSA is currently considering possible changes to the agency’s safety and fitness regulations.
The revisions allow drivers more flexibility with their 30-minute rest breaks and with dividing their time in the sleeper berth. Additionally, the new regulations increase by two hours the duty time for drivers encountering adverse weather and expand the short haul exemption radius from 100 to 150 miles.
Additionally, the new regulations increase by two hours the duty time for drivers encountering adverse weather and expand the short haul exemption radius from 100 to 150 miles.
Risks Related to Regulation of Company ’ s Operations We operate in a highly regulated industry and increased costs of compliance with, or liability for violation of, existing or future regulations could have a materially adverse effect on our business .
Additionally, stresses in the credit market causes uncertainty in the equity markets, which may result in volatility of the market price for our securities. 10 Risks Related to Regulation of Our Operations We operate in a highly regulated industry and increased costs of compliance with, or liability for violation of, existing or future regulations could have a materially adverse effect on our business .
For 2022 our top 30 customers, based on revenue excluding fuel surcharges, accounted for approximately 68% of our revenue; our top ten customers accounted for approximately 45% of our revenue; our top five customers accounted for approximately 36% of our revenue; our top two customers accounted for approximately 28% of our revenue; and our largest customer accounted for approximately 21% of our revenue.
For 2023 our top 30 customers, based on revenue excluding fuel surcharges, accounted for approximately 69% of our revenue; our top ten customers accounted for approximately 47% of our revenue; our top five customers accounted for approximately 35% of our revenue; our top two customers accounted for approximately 27% of our revenue; and our largest customer accounted for approximately 19% of our revenue.
The truckload industry is capital intensive, and our policy of operating newer equipment requires us to expend significant amounts annually. If we elect to expand our fleet in future periods, our capital needs would increase. We expect to pay for projected capital expenditures with cash flows from operations and borrowings under our revolving credit facility.
If we elect to expand our fleet in future periods, our capital needs would increase. We expect to pay for projected capital expenditures with cash flows from operations and borrowings under our revolving credit facility. Significant increases or fluctuations in interest rates could have a materially adverse effect on such borrowings and our operating results.
The extent to which the pandemic impacts our business and operating results will depend on future developments, which are highly uncertain and cannot be predicted. 9 Risks Related to Company ’ s Capital Requirements and Financing We have significant ongoing capital requirements that could harm our financial condition, results of operations and cash flows if we are unable to generate sufficient cash from our operations.
Risks Related to Our Capital Requirements and Financing We have significant ongoing capital requirements that could harm our financial condition, results of operations and cash flows if we are unable to generate sufficient cash from our operations. The truckload industry is capital intensive, and our policy of operating newer equipment requires us to expend significant amounts annually.
Beginning in January 2020, all carriers are required to run queries in the clearinghouse for all prospective drivers and annually for all drivers currently employed. All testing violations must also be reported to the clearinghouse.
The FMCSA has established a Commercial Driver’s License Drug and Alcohol Clearinghouse, which is a database of drivers who have violations including failed or refused drug and alcohol tests. Beginning in January 2020, all carriers are required to run queries in the clearinghouse for all prospective drivers and annually for all drivers currently employed.
Costs associated with future climate change concerns or environmental laws and regulations and sustainability requirements could have a material adverse effect on our operations and operating results. Seasonality and the impact of weather can affect our profitability . Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments.
Seasonality and the impact of weather can affect our profitability . Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments. At the same time, operating expenses generally increase, with harsh weather creating higher accident frequency, increased claims and more equipment repairs.
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An increase in the severity of the COVID-19 pandemic could negatively impact our business and results of operations. Our business may face risks should an increase in the severity of the COVID-19 pandemic occur. The future impact of the pandemic continues to be an unknown.
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For example, severe sustained heat in multiple regions of the United States during the summer of 2023 resulted in increased fuel expense due to decreased engine fuel efficiency and increased idling, along with additional damage and wear on tires.
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Significant increases or fluctuations in interest rates could have a materially adverse effect on such borrowings and our operating results.
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The State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026.
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Our entire fleet has been equipped with AOBRD’s since early 2011 and converted to ELD’s prior to December 2019. 10 The FMCSA has established a Commercial Driver’s License Drug and Alcohol Clearinghouse, which is a database of drivers who have violations including failed or refused drug and alcohol tests.
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Additionally, the SEC has included in its regulatory agenda potential rulemaking on climate change disclosures that, if adopted, could significantly increase compliance burdens and associated regulatory costs and complexity. Costs associated with future climate change concerns or environmental laws and regulations and sustainability requirements could have a material adverse effect on our operations and operating results.
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While many countries around the world have removed or reduced the restrictions taken in response to the COVID-19 pandemic, the emergence of new variants of the COVID-19 virus may result in new governmental lockdowns, quarantine requirements or other restrictions to slow the spread of the virus.
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In addition, any such measures could also impact the global economy more broadly, for example, by leading to further economic slowdowns. While COVID-19 case volumes have decreased in the United States and certain other countries, the global outlook remains uncertain as case counts fluctuate and vaccination and booster rates remain relatively low in many parts of the world.
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The scope and duration of any future public health crisis, including the potential emergence of new variants of the COVID-19 virus, the pace at which government restrictions are imposed and lifted, the scope of additional actions taken to mitigate the spread of disease, global vaccination and booster rates, the speed and extent to which global markets and utilization rates for our customers’ products fully recover from the disruptions caused by such a public health crisis, and the impact of these factors on our business, financial condition and results of operations, will depend on future developments that are highly uncertain and cannot be predicted with confidence.
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The conflict between Russia and Ukraine, the conflict between Israel and Hamas, and the expansion of such conflicts to other areas or countries or similar conflicts could adversely impact our business and financial results.
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Although we do not have any operations outside of North America, we may be affected by the broader consequences of the ongoing international conflicts or expansion of such conflicts to other areas or countries or similar conflicts elsewhere, such as, increased inflation, supply chain issues, including access to parts for our revenue equipment, embargoes, geopolitical shift, access to diesel fuel, higher energy prices, potential retaliatory action by the Russian or other governments and the extent of the conflict’s effect on the global economy.
Added
The magnitude of these risks cannot be predicted, including the extent to which these conflicts may heighten other risks disclosed herein. Any of the above-mentioned factors could materially adversely affect our business and financial results.
Added
The FMCSA issued final revisions to the hours-of-service requirements for drivers in September 2020. The revisions allow drivers more flexibility with their 30-minute rest breaks and with dividing their time in the sleeper berth.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−3 removed4 unchanged
Biggest changeWaivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to $80 million in each of 2022 and 2021 were obtained from the lender in March 2022 and August 2021, respectively. A similar waiver of up to $60 million in 2020 was obtained from the lender in November 2020.
Biggest changeWaivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to $80 million in each of 2022 and 2021 were obtained from the lender in March 2022 and August 2021, respectively.
We repurchased and retired 1.3 million shares of common stock for $25.0 million in the first quarter of 2022, and 963,000 shares of common stock for $16.8 million in the second quarter of 2022. We did not repurchase any shares in the third or fourth quarters of 2022 or in 2021.
We repurchased and retired 1.3 million shares of common stock for $25.0 million in the first quarter of 2022, and 963,000 shares of common stock for $16.8 million in the second quarter of 2022. We did not repurchase any shares in 2023, the third or fourth quarters of 2022, or in 2021.
Research Data Group, Inc. prepared the line-of-business index. The graph assumes $100 is invested in our common stock, the NASDAQ Stock Market index and the line-of-business index on December 31, 2017, with reinvestment of dividends. The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of our common stock.
Research Data Group, Inc. prepared the line-of-business index. The graph assumes $100 is invested in our common stock, the NASDAQ Stock Market index and the line-of-business index on December 31, 2018, with reinvestment of dividends. The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of our common stock.
The current and previous credit agreements also contain restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios. We were in compliance with all covenants at December 31, 2022 and December 31, 2021.
The current and previous credit agreements also contain restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios. We were in compliance with all covenants at December 31, 2023 and December 31, 2022.
As of December 31, 2022, future repurchases of up to $33.2 million, or approximately 2.2 million shares, were available in the share repurchase program. 14 Comparative Stock Performance The graph below compares the cumulative total stockholder return on our common stock with the NASDAQ Market index and the SIC code 4213 (trucking, except local) line-of-business index for the last five years.
As of December 31, 2023, future repurchases of up to $33.2 million, or approximately 2.2 million shares, were available in the share repurchase program. 16 Comparative Stock Performance The graph below compares the cumulative total stockholder return on our common stock with the NASDAQ Market index and the SIC code 4213 (trucking, except local) line-of-business index for the last five years.
The information in the graph below shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. 15
The information in the graph below shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. 17
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NASDAQ Global Select Market under the symbol “MRTN.” On February 14, 2023, we had 161 record stockholders and approximately 20,114 beneficial stockholders of our common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NASDAQ Global Select Market under the symbol “MRTN.” On February 14, 2024, we had 155 record stockholders and approximately 20,096 beneficial stockholders of our common stock.
We currently expect to continue to pay quarterly cash dividends in the future. The payment of cash dividends in the future, and the amount of any such dividends, will depend upon our financial condition, results of operations, cash requirements, and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors.
The payment of cash dividends in the future, and the amount of any such dividends, will depend upon our financial condition, results of operations, cash requirements and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors.
We paid cash dividends totaling $54.7 million in 2021 which consisted of a special dividend of $0.50 per share of common stock in October, along with quarterly cash dividends of $0.04 per share of common stock in March, June, October and December.
We paid cash dividends totaling $54.7 million in 2021 which consisted of a special dividend of $0.50 per share of common stock in October, along with quarterly cash dividends of $0.04 per share of common stock in March, June, October and December. We currently expect to continue to pay quarterly cash dividends in the future.
Dividend Policy In 2010, we announced a regular cash dividend program to our stockholders, subject to approval each quarter. A quarterly cash dividend of $0.06 per share of common stock was paid in each quarter of 2022 which totaled $19.6 million.
Dividend Policy In 2010, we announced a regular cash dividend program to our stockholders, subject to approval each quarter. Quarterly cash dividends of $0.06 per share of common stock were paid in each quarter of 2023 which totaled $19.5 million.
Removed
On August 13, 2020, we effected a three-for-two stock split of our common stock, $.01 par value, in the form of a 50% stock dividend. The following cash dividends and share amounts have been adjusted to give retroactive effect to the stock split for all periods presented.
Added
Quarterly cash dividends of $0.06 per share of common stock were paid in each quarter of 2022 which totaled $19.6 million.
Removed
We paid cash dividends totaling $52.4 million in 2020 which consisted of a special dividend of $0.50 per share of common stock in December, along with quarterly cash dividends of $0.04 per share of common stock in the third and fourth quarters and of $0.027 per share of common stock in the first and second quarters.
Removed
We repurchased and retired 53,064 shares of common stock for $597,000 in the first quarter of 2020.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

3 edited+0 added−0 removed4 unchanged
Biggest changeOTHER INFORMATION 50 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 50 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 51 ITEM 11. EXECUTIVE COMPENSATION 51 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 51 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 51 ITEM 14.
Biggest changeOTHER INFORMATION 53 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 53 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 54 ITEM 11. EXECUTIVE COMPENSATION 54 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 54 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 54 ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES 52 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 52 ITEM 16. FORM 10-K SUMMARY 57 OTHER Signature Page 58 i FORWARD-LOOKING INFORMATION This Annual Report on Form 10-K contains certain forward-looking statements. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
PRINCIPAL ACCOUNTANT FEES AND SERVICES 55 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 55 ITEM 16. FORM 10-K SUMMARY 60 OTHER Signature Page 61 i FORWARD-LOOKING INFORMATION This Annual Report on Form 10-K contains certain forward-looking statements. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
ITEM 6. [RESERVED] ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 16 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 27 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 28 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 50 ITEM 9A. CONTROLS AND PROCEDURES 50 ITEM 9B.
ITEM 6. [RESERVED] ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 30 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 31 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 53 ITEM 9A. CONTROLS AND PROCEDURES 53 ITEM 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

75 edited+15 added−16 removed43 unchanged
Biggest changeThe following table sets forth for the years indicated the dollar and percentage increase or decrease of the items in our consolidated statements of operations, and those items as a percentage of operating revenue: Dollar Change Percentage Change Percentage of Operating Revenue (Dollars in thousands) 2021 vs. 2020 2021 vs. 2020 2021 2020 Operating revenue $ 99,270 11.4 % 100.0 % 100.0 % Operating expenses (income): Salaries, wages and benefits 17,807 5.9 32.7 34.3 Purchased transportation 38,608 25.0 19.8 17.7 Fuel and fuel taxes 33,155 33.8 13.5 11.2 Supplies and maintenance (2,356 ) (4.9 ) 4.7 5.5 Depreciation (331 ) (0.3 ) 10.5 11.8 Operating taxes and licenses (306 ) (2.8 ) 1.1 1.2 Insurance and claims (5,467 ) (11.5 ) 4.3 5.4 Communications and utilities 339 4.2 0.9 0.9 Gain on disposition of revenue equipment (7,562 ) (86.6 ) (1.7 ) (1.0 ) Gain on disposition of facility 1,718 100.0 - (0.2 ) Other 5,222 24.1 2.8 2.5 Total operating expenses 80,827 10.3 88.5 89.3 Operating income 18,443 19.8 11.5 10.7 Other 97 69.3 - - Income before income taxes 18,346 19.6 11.5 10.7 Income taxes expense 2,418 10.1 2.7 2.7 Net income $ 15,928 22.9 % 8.8 % 7.9 % Salaries, wages and benefits expense increased $17.8 million, or 5.9%, in 2021 from 2020.
Biggest changeThe following table sets forth for the years indicated the dollar and percentage increase or decrease of the items in our consolidated statements of operations, and those items as a percentage of operating revenue: Dollar Change Percentage Change Percentage of Operating Revenue (Dollars in thousands) 2023 vs. 2022 2023 vs. 2022 2023 2022 Operating revenue $ (132,423 ) (10.5 )% 100.0 % 100.0 % Operating expenses (income): Salaries, wages and benefits (11,486 ) (2.9 ) 33.5 30.9 Purchased transportation (50,458 ) (20.2 ) 17.6 19.8 Fuel and fuel taxes (38,134 ) (17.4 ) 15.9 17.3 Supplies and maintenance 11,711 21.0 6.0 4.4 Depreciation 5,708 5.1 10.3 8.8 Operating taxes and licenses 290 2.7 1.0 0.9 Insurance and claims 5,501 10.9 5.0 4.0 Communications and utilities 972 10.6 0.9 0.7 Gain on disposition of revenue equipment (233 ) (1.7 ) (1.2 ) (1.1 ) Other (3,060 ) (8.0 ) 3.1 3.0 Total operating expenses (79,189 ) (7.1 ) 92.0 88.7 Operating income (53,234 ) (37.1 ) 8.0 11.3 Other (2,979 ) (360.2 ) (0.3 ) (0.1 ) Income before income taxes (50,255 ) (34.9 ) 8.3 11.4 Income taxes expense (10,274 ) (30.4 ) 2.1 2.7 Net income $ (39,981 ) (36.2 )% 6.2 % 8.7 % 22 Salaries, wages and benefits consist of compensation for our employees, including both driver and non-driver employees, employees’ health insurance, 401(k) plan contributions and other fringe benefits.
The $8.5 million, or 20.3%, increase in insurance and claims in 2022 was primarily due to increases in our self-insured auto liability claim costs and in the cost of physical damage claims related to our revenue equipment.
The $8.5 million, or 20.3%, increase in insurance and claims in 2022 was primarily due to increases in our self-insured auto liability claim costs and in the self-insured cost of physical damage claims related to our revenue equipment.
We have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers’ fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in the temperature-control units on our trailers.
We have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers’ fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in the temperature-control units on our trailers.
The excess of the insurance and claims accruals over these amounts relates to general liability, cargo and property damage claims, along with reserves for physical damage to our equipment and outstanding employees’ health insurance claims. We reserve for the estimated cost of the uninsured portion of pending auto liability and workers’ compensation claims, including legal costs.
The excess of the insurance and claims accruals over these amounts relates to general liability, cargo and property damage claims, along with reserves for physical damage to our equipment and outstanding employees’ health insurance claims. 29 We reserve for the estimated cost of the uninsured portion of pending auto liability and workers’ compensation claims, including legal costs.
We repurchased and retired 1.3 million shares of common stock for $25.0 million in the first quarter of 2022, and 963,000 shares of common stock for $16.8 million in the second quarter of 2022. We did not repurchase any shares in the third or fourth quarters of 2022 or in 2021.
We repurchased and retired 1.3 million shares of common stock for $25.0 million in the first quarter of 2022, and 963,000 shares of common stock for $16.8 million in the second quarter of 2022. We did not repurchase any shares in 2023, the third or fourth quarters of 2022, or in 2021.
We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, which will result in greater depreciation over the useful life.
We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of continued higher prices of new equipment, which will result in greater depreciation over the useful life.
The current and previous credit agreements also contain restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios. We were in compliance with all covenants at December 31, 2022 and December 31, 2021.
The current and previous credit agreements also contain restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios. We were in compliance with all covenants at December 31, 2023 and December 31, 2022.
There were no changes to our methodology used to estimate our ultimate claims losses in 2022 or 2021. Projection of losses is subject to a high level of estimation uncertainty and actual results could differ from these current estimates.
There were no changes to our methodology used to estimate our ultimate claims losses in 2023 or 2022. Projection of losses is subject to a high level of estimation uncertainty and actual results could differ from these current estimates.
Our Brokerage segment develops contractual relationships with and arranges for third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans within the United States and into and out of Mexico through Marten Transport Logistics, LLC, which was established in 2007 and operates pursuant to brokerage authority granted by the DOT.
Our Brokerage segment develops contractual relationships with and arranges for third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans within the United States and into and out of Mexico through Marten Transport Logistics, LLC, which was established in 2007 and operates pursuant to brokerage authority granted by the United States Department of Transportation, or DOT.
Fuel surcharge revenue increased to $210.4 million in 2022 from $117.7 million in 2021 primarily due to higher fuel costs. 19 Truckload segment revenue increased $103.8 million, or 26.2%, to $500.5 million in 2022 from $396.7 million in 2021.
Fuel surcharge revenue increased to $210.4 million in 2022 from $117.7 million in 2021 primarily due to higher fuel costs. 25 Truckload segment revenue increased $103.8 million, or 26.2%, to $500.5 million in 2022 from $396.7 million in 2021.
Additionally, we have $16.1 million in standby letters of credit to guarantee settlement of claims under agreements with our insurance carriers and regulatory authorities. We maintain insurance coverage for per-incident and total losses in excess of these risk retention levels in amounts we consider adequate based upon historical experience and our ongoing review.
Additionally, we have $20.7 million in standby letters of credit to guarantee settlement of claims under agreements with our insurance carriers and regulatory authorities. We maintain insurance coverage for per-incident and total losses in excess of these risk retention levels in amounts we consider adequate based upon historical experience and our ongoing review.
We self-insure for our portion of claims exposure resulting from auto liability and workers’ compensation claims. We are responsible for the first $1.0 million on each auto liability claim and for the first $750,000 on each workers’ compensation claim.
Auto Liability and Workers ’ Compensation Claims Reserves. We self-insure for our portion of claims exposure resulting from auto liability and workers’ compensation claims. We are responsible for the first $1.0 million on each auto liability claim and for the first $750,000 on each workers’ compensation claim.
Other than our obligations for revenue equipment and building construction purchases and operating lease expenditures, along with our outstanding standby letters of credit to guarantee settlement of self-insurance claims, which are each mentioned above, we did not have any material off-balance sheet arrangements at December 31, 2022.
Other than our obligations for revenue equipment and operating lease expenditures, along with our outstanding standby letters of credit to guarantee settlement of self-insurance claims, which are each mentioned above, we did not have any material off-balance sheet arrangements at December 31, 2023.
Independent contractors provided 96, 93 and 143 tractors as of December 31, 2022, 2021 and 2020, respectively. 18 Comparison of Year Ended December 31, 2022 to Year Ended December 31, 2021 The following table sets forth for the years indicated our operating revenue, operating income and operating ratio by segment, along with the change for each component: Dollar Change Percentage Change (Dollars in thousands) 2022 2021 2022 vs. 2021 2022 vs. 2021 Operating revenue: Truckload revenue, net of fuel surcharge revenue $ 411,448 $ 346,289 $ 65,159 18.8 % Truckload fuel surcharge revenue 89,014 50,377 38,637 76.7 Total Truckload revenue 500,462 396,666 103,796 26.2 Dedicated revenue, net of fuel surcharge revenue 336,973 276,883 60,090 21.7 Dedicated fuel surcharge revenue 92,119 52,559 39,560 75.3 Total Dedicated revenue 429,092 329,442 99,650 30.2 Intermodal revenue, net of fuel surcharge revenue 100,452 87,468 12,984 14.8 Intermodal fuel surcharge revenue 29,313 14,777 14,536 98.4 Total Intermodal revenue 129,765 102,245 27,520 26.9 Brokerage revenue 204,559 145,291 59,268 40.8 Total operating revenue $ 1,263,878 $ 973,644 $ 290,234 29.8 % Operating income: Truckload $ 59,392 $ 51,032 $ 8,360 16.4 % Dedicated 50,566 36,395 14,171 38.9 Intermodal 10,639 9,479 1,160 12.2 Brokerage 22,747 14,783 7,964 53.9 Total operating income $ 143,344 $ 111,689 $ 31,655 28.3 % Operating ratio: Truckload 88.1 % 87.1 % Dedicated 88.2 89.0 Intermodal 91.8 90.7 Brokerage 88.9 89.8 Consolidated operating ratio 88.7 % 88.5 % Operating ratio, net of fuel surcharges: Truckload 85.6 % 85.3 % Dedicated 85.0 86.9 Intermodal 89.4 89.2 Brokerage 88.9 89.8 Consolidated operating ratio, net of fuel surcharges 86.4 % 87.0 % Our operating revenue increased $290.2 million, or 29.8%, to $1.264 billion in 2022 from $973.6 million in 2021.
As a result of the factors described above, net income declined 36.2% to $70.4 million, or $0.86 per diluted share, in 2023 from $110.4 million, or $1.35 per diluted share, in 2022. 24 Comparison of Year Ended December 31, 2022 to Year Ended December 31, 2021 The following table sets forth for the years indicated our operating revenue, operating income and operating ratio by segment, along with the change for each component: Dollar Change Percentage Change (Dollars in thousands) 2022 2021 2022 vs. 2021 2022 vs. 2021 Operating revenue: Truckload revenue, net of fuel surcharge revenue $ 411,448 $ 346,289 $ 65,159 18.8 % Truckload fuel surcharge revenue 89,014 50,377 38,637 76.7 Total Truckload revenue 500,462 396,666 103,796 26.2 Dedicated revenue, net of fuel surcharge revenue 336,973 276,883 60,090 21.7 Dedicated fuel surcharge revenue 92,119 52,559 39,560 75.3 Total Dedicated revenue 429,092 329,442 99,650 30.2 Intermodal revenue, net of fuel surcharge revenue 100,452 87,468 12,984 14.8 Intermodal fuel surcharge revenue 29,313 14,777 14,536 98.4 Total Intermodal revenue 129,765 102,245 27,520 26.9 Brokerage revenue 204,559 145,291 59,268 40.8 Total operating revenue $ 1,263,878 $ 973,644 $ 290,234 29.8 % Operating income: Truckload $ 59,392 $ 51,032 $ 8,360 16.4 % Dedicated 50,566 36,395 14,171 38.9 Intermodal 10,639 9,479 1,160 12.2 Brokerage 22,747 14,783 7,964 53.9 Total operating income $ 143,344 $ 111,689 $ 31,655 28.3 % Operating ratio: Truckload 88.1 % 87.1 % Dedicated 88.2 89.0 Intermodal 91.8 90.7 Brokerage 88.9 89.8 Consolidated operating ratio 88.7 % 88.5 % Operating ratio, net of fuel surcharges: Truckload 85.6 % 85.3 % Dedicated 85.0 86.9 Intermodal 89.4 89.2 Brokerage 88.9 89.8 Consolidated operating ratio, net of fuel surcharges 86.4 % 87.0 % Our operating revenue increased $290.2 million, or 29.8%, to $1.264 billion in 2022 from $973.6 million in 2021.
The following table sets forth for the years indicated the dollar and percentage increase or decrease of the items in our consolidated statements of operations, and those items as a percentage of operating revenue: Dollar Change Percentage Change Percentage of Operating Revenue (Dollars in thousands) 2022 vs. 2021 2022 vs. 2021 2022 2021 Operating revenue $ 290,234 29.8 % 100.0 % 100.0 % Operating expenses (income): Salaries, wages and benefits 72,342 22.8 30.9 32.7 Purchased transportation 56,571 29.3 19.8 19.8 Fuel and fuel taxes 87,283 66.5 17.3 13.5 Supplies and maintenance 10,241 22.5 4.4 4.7 Depreciation 8,452 8.2 8.8 10.5 Operating taxes and licenses 229 2.2 0.9 1.1 Insurance and claims 8,526 20.3 4.0 4.3 Communications and utilities 827 9.9 0.7 0.9 Gain on disposition of revenue equipment 2,916 17.9 (1.1 ) (1.7 ) Other 11,192 41.6 3.0 2.8 Total operating expenses 258,579 30.0 88.7 88.5 Operating income 31,655 28.3 11.3 11.5 Other (784 ) (1,823.3 ) (0.1 ) - Income before income taxes 32,439 29.0 11.4 11.5 Income taxes expense 7,513 28.6 2.7 2.7 Net income $ 24,926 29.2 % 8.7 % 8.8 % Salaries, wages and benefits consist of compensation for our employees, including both driver and non-driver employees, employees’ health insurance, 401(k) plan contributions and other fringe benefits.
The following table sets forth for the years indicated the dollar and percentage increase or decrease of the items in our consolidated statements of operations, and those items as a percentage of operating revenue: Dollar Change Percentage Change Percentage of Operating Revenue (Dollars in thousands) 2022 vs. 2021 2022 vs. 2021 2022 2021 Operating revenue $ 290,234 29.8 % 100.0 % 100.0 % Operating expenses (income): Salaries, wages and benefits 72,342 22.8 30.9 32.7 Purchased transportation 56,571 29.3 19.8 19.8 Fuel and fuel taxes 87,283 66.5 17.3 13.5 Supplies and maintenance 10,241 22.5 4.4 4.7 Depreciation 8,452 8.2 8.8 10.5 Operating taxes and licenses 229 2.2 0.9 1.1 Insurance and claims 8,526 20.3 4.0 4.3 Communications and utilities 827 9.9 0.7 0.9 Gain on disposition of revenue equipment 2,916 17.9 (1.1 ) (1.7 ) Other 11,192 41.6 3.0 2.8 Total operating expenses 258,579 30.0 88.7 88.5 Operating income 31,655 28.3 11.3 11.5 Other (784 ) (1,823.3 ) (0.1 ) - Income before income taxes 32,439 29.0 11.4 11.5 Income taxes expense 7,513 28.6 2.7 2.7 Net income $ 24,926 29.2 % 8.7 % 8.8 % Salaries, wages and benefits expense increased $72.3 million, or 22.8%, in 2022 from 2021.
(In thousands) 2022 2021 2020 Net cash flows provided by operating activities $ 219,489 $ 171,204 $ 189,598 Net cash flows used for investing activities (134,958 ) (123,734 ) (106,325 ) Net cash flows used for financing activities (60,926 ) (56,602 ) (48,607 ) In August 2019, our Board of Directors approved and we announced an increase from current availability in our existing share repurchase program providing for the repurchase of up to $34.0 million, or approximately 1.8 million shares, of our common stock, which was increased by our Board of Directors to 2.7 million shares in August 2020 to reflect the three-for-two stock split effected in the form of a stock dividend on August 13, 2020.
(In thousands) 2023 2022 2021 Net cash flows provided by operating activities $ 164,378 $ 219,489 $ 171,204 Net cash flows used for investing activities (172,540 ) (134,958 ) (123,734 ) Net cash flows used for financing activities (19,225 ) (60,926 ) (56,602 ) In August 2019, our Board of Directors approved and we announced an increase from current availability in our existing share repurchase program providing for the repurchase of up to $34.0 million, or approximately 1.8 million shares, of our common stock, which was increased by our Board of Directors to 2.7 million shares in August 2020 to reflect the three-for-two stock split effected in the form of a stock dividend on August 13, 2020.
The total auto liability and workers’ compensation claims reserves within the insurance and claims accruals in our consolidated balance sheets were $39.3 million and $36.8 million as of December 31, 2022 and 2021, respectively.
The total auto liability and workers’ compensation claims reserves within the insurance and claims accruals in our consolidated balance sheets were $40.3 million and $39.3 million as of December 31, 2023 and 2022, respectively.
Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased $5.0 million, or 18.5%, to $31.9 million in 2022 from $26.9 million in 2021. Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads increased to $23.8 million from $13.3 million in 2021.
Fuel and fuel taxes increased by $87.3 million, or 66.5%, in 2022 from 2021. Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased $5.0 million, or 18.5%, to $31.9 million in 2022 from $26.9 million in 2021.
We believe that the following area involves critical accounting estimates due to the levels of subjectivity and judgment that are necessary to account for its highly uncertain matters, the susceptibility of such matters to change, and the potentially material impact these estimates and assumptions could have to our financial condition and operating performance. 26 Auto Liability and Workers ’ Compensation Claims Reserves.
We believe that the following area involves critical accounting estimates due to the levels of subjectivity and judgment that are necessary to account for its highly uncertain matters, the susceptibility of such matters to change and the potentially material impact these estimates and assumptions could have to our financial condition and operating performance.
We currently expect to continue to pay quarterly cash dividends in the future. The payment of cash dividends in the future, and the amount of any such dividends, will depend upon our financial condition, results of operations, cash requirements, and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors.
The payment of cash dividends in the future, and the amount of any such dividends, will depend upon our financial condition, results of operations, cash requirements and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors.
We paid cash dividends totaling $54.7 million in 2021 which consisted of a special dividend of $0.50 per share of common stock in October, along with quarterly cash dividends of $0.04 per share of common stock in March, June, October and December.
We paid cash dividends totaling $54.7 million in 2021 which consisted of a special dividend of $0.50 per share of common stock in October, along with quarterly cash dividends of $0.04 per share of common stock in March, June, October and December. We currently expect to continue to pay quarterly cash dividends in the future.
Waivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to $80 million in each of 2022 and 2021 were obtained from the lender in March 2022 and August 2021, respectively. A similar waiver of up to $60 million in 2020 was obtained from the lender in November 2020.
Waivers allowing stock redemptions and dividends in excess of the 25% limitation in total amounts of up to $80 million in each of 2022 and 2021 were obtained from the lender in March 2022 and August 2021, respectively.
For our Intermodal and Brokerage segments, our profitability is impacted by the percentage of revenue which is payable to the providers of the transportation services we arrange. This expense is included within purchased transportation in our consolidated statements of operations. Our operating income improved 28.3% to $143.3 million in 2022 from $111.7 million in 2021.
For our Intermodal and Brokerage segments, our profitability is impacted by the percentage of revenue which is payable to the providers of the transportation services we arrange. This expense is included within purchased transportation in our consolidated statements of operations. Our operating income declined 37.1% to $90.1 million in 2023 from $143.3 million in 2022.
Our operating expenses as a percentage of operating revenue, or “operating ratio,” was 88.7% in 2022 and 88.5% in 2021. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 86.4% in 2022 from 87.0% in 2021.
Our operating expenses as a percentage of operating revenue, or “operating ratio,” was 92.0% in 2023 and 88.7% in 2022. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, increased to 90.7% in 2023 from 86.4% in 2022.
These expenses vary depending upon the size of our Truckload, Dedicated and Intermodal tractor fleets, the ratio of company drivers to independent contractors, our efficiency, our experience with employees’ health insurance claims, changes in health care premiums and other factors. Salaries, wages and benefits expense increased $72.3 million, or 22.8%, in 2022 from 2021.
These expenses vary depending upon the size of our Truckload, Dedicated and Intermodal tractor fleets, the ratio of company drivers to independent contractors, our efficiency, our experience with employees’ health insurance claims, changes in health care premiums and other factors. Salaries, wages and benefits expense decreased $11.5 million, or 2.9%, in 2023 from 2022.
This category will vary depending upon the amount and rates, including fuel surcharges, we pay to third-party railroad and motor carriers, the ratio of company drivers versus independent contractors and the amount of fuel surcharges passed through to independent contractors. Purchased transportation expense increased $56.6 million in total, or 29.3%, in 2022 from 2021.
This category will vary depending upon the amount and rates, including fuel surcharges, we pay to third-party railroad and motor carriers, the ratio of company drivers versus independent contractors and the amount of fuel surcharges passed through to independent contractors. Purchased transportation expense decreased $50.5 million in total, or 20.2%, in 2023 from 2022.
Our net income improved 29.2% to $110.4 million, or $1.35 per diluted share, in 2022 from $85.4 million, or $1.02 per diluted share, in 2021. Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers.
As a result of the factors described above, net income improved 29.2% to $110.4 million, or $1.35 per diluted share, in 2022 from $85.4 million, or $1.02 per diluted share, in 2021. 27 Liquidity and Capital Resources Our business requires substantial ongoing capital investments, particularly for new tractors and trailers.
In addition to the factors discussed above, our operating revenue is also affected by, among other things, the United States economy, inventory levels, the level of truck and rail capacity in the transportation market, a contracting driver market, severe weather conditions and specific customer demand. 16 Our operating revenue increased $290.2 million, or 29.8%, in 2022 from 2021.
In addition to the factors discussed above, our operating revenue is also affected by, among other things, the United States economy, inventory levels, the level of truck and rail capacity in the transportation market, a contracting driver market, severe weather conditions and specific customer demand. 18 Our operating revenue decreased $132.4 million, or 10.5%, in 2023 from 2022.
We manage our exposure to changes in fuel prices primarily through fuel surcharge programs with our customers, as well as through volume fuel purchasing arrangements with national fuel centers and bulk purchases of fuel at our terminals.
For example, fuel prices have significantly fluctuated over the past several years. We manage our exposure to changes in fuel prices primarily through fuel surcharge programs with our customers, as well as through volume fuel purchasing arrangements with national fuel centers and bulk purchases of fuel at our terminals.
This facility bears interest at a variable rate based on the Term SOFR Rate plus applicable margins. The interest rate for the facility that would apply to outstanding principal balances was 7.5% at December 31, 2022. Our credit agreement effective in August 2022 prohibits us from paying, in any fiscal year, stock redemptions and dividends in excess of $150 million.
The interest rate for the facility that would apply to outstanding principal balances was 8.5% at December 31, 2023. Our credit agreement effective in August 2022 prohibits us from paying, in any fiscal year, stock redemptions and dividends in excess of $150 million.
Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads increased to $13.3 million from $9.7 million in 2020. The DOE national average cost of fuel increased to $3.29 per gallon from $2.55 per gallon in 2020.
Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads increased to $23.8 million from $13.3 million in 2021. The DOE national average cost of fuel increased to $4.99 per gallon from $3.29 per gallon in 2021.
Our Truckload segment provides a combination of regional short-haul and medium-to-long-haul full-load transportation services. We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment, along with dry freight, across the United States and into and out of Mexico and Canada. Our agreements with customers are typically for one year.
We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment, along with dry freight, across the United States and into and out of Mexico and Canada. Our agreements with customers are typically for one year.
Our supplies and maintenance expense decreased $2.4 million, or 4.9%, from 2020 primarily due to lower outside repair, loading/unloading and parts costs. Depreciation relates to owned tractors, trailers, containers, auxiliary power units, communication units, terminal facilities and other assets.
Our supplies and maintenance expense increased $11.7 million, or 21.0%, from 2022 primarily due to higher outside repair, loading/unloading and parts costs. Depreciation relates to owned tractors, trailers, containers, auxiliary power units, communication units, terminal facilities and other assets.
The $5.5 million, or 11.5%, decrease in insurance and claims in 2021 was primarily due to decreases in the cost of our self-insured physical damage claims related to our revenue equipment and our self-insured auto liability and workers’ compensation claims, partially offset by an increase in our insurance premiums.
The $5.5 million, or 10.9% increase in insurance and claims in 2023 was primarily due to increases in our self-insured cost of physical damage claims related to our revenue equipment, self-insured workers’ compensation claim costs and insurance premiums, partially offset by a reduction in our self-insured auto liability claim costs.
Results of Operations The following table sets forth for the years indicated certain operating statistics regarding our revenue and operations: 2022 2021 2020 Truckload Segment: Revenue (in thousands) $ 500,462 $ 396,666 $ 379,148 Average revenue, net of fuel surcharges, per tractor per week (1) $ 4,898 $ 4,315 $ 3,926 Average tractors (1) 1,611 1,539 1,668 Average miles per trip 510 516 547 Total miles (in thousands) 149,868 147,192 165,267 Dedicated Segment: Revenue (in thousands) $ 429,092 $ 329,442 $ 309,784 Average revenue, net of fuel surcharges, per tractor per week (1) $ 3,963 $ 3,377 $ 3,316 Average tractors (1) 1,631 1,572 1,566 Average miles per trip 341 322 305 Total miles (in thousands) 136,310 128,256 132,597 Intermodal Segment: Revenue (in thousands) $ 129,765 $ 102,245 $ 88,733 Loads 31,862 32,987 36,444 Average tractors 175 143 106 Brokerage Segment: Revenue (in thousands) $ 204,559 $ 145,291 $ 96,709 Loads 95,615 66,512 58,986 (1) Includes tractors driven by both company-employed drivers and independent contractors.
Results of Operations The following table sets forth for the years indicated certain operating statistics regarding our revenue and operations: 2023 2022 2021 Truckload Segment: Revenue (in thousands) $ 465,475 $ 500,462 $ 396,666 Average revenue, net of fuel surcharges, per tractor per week (1) $ 4,377 $ 4,898 $ 4,315 Average tractors (1) 1,733 1,611 1,539 Average miles per trip 519 510 516 Total miles (in thousands) 155,929 149,868 147,192 Dedicated Segment: Revenue (in thousands) $ 408,272 $ 429,092 $ 329,442 Average revenue, net of fuel surcharges, per tractor per week (1) $ 3,936 $ 3,963 $ 3,377 Average tractors (1) 1,632 1,631 1,572 Average miles per trip 335 341 322 Total miles (in thousands) 133,163 136,310 128,256 Intermodal Segment: Revenue (in thousands) $ 92,078 $ 129,765 $ 102,245 Loads 25,160 31,862 32,987 Average tractors 159 175 143 Brokerage Segment: Revenue (in thousands) $ 165,630 $ 204,559 $ 145,291 Loads 91,077 95,615 66,512 (1) Includes tractors driven by both company-employed drivers and independent contractors.
Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 86.4% in 2022 from 87.0% in 2021.
Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 86.4% in 2022 from 87.0% in 2021. Our effective income tax rate was 23.5% in each of 2022 and 2021.
This increase resulted primarily from additional company driver compensation expense of $12.6 million and a $2.7 million increase in bonus compensation expense for our non-driver employees.
This decrease resulted primarily from a $9.6 million decrease in bonus compensation expense for our non-driver employees and lower company driver compensation expense of $4.6 million, partially offset by a $4.7 million increase in non-driver compensation expense.
The $5.2 million increase in other operating expenses in 2021 was primarily due to increased costs associated with driver recruitment and retention. Our operating income improved 19.8% to $111.7 million in 2021 from $93.2 million in 2020 as a result of the foregoing factors.
The $11.2 million increase in other operating expenses in 2022 was primarily due to increases in costs associated with driver recruitment and retention along with travel and meals expense. Our operating income improved 28.3% to $143.3 million in 2022 from $111.7 million in 2021 as a result of the foregoing factors.
Our profitability is impacted by the variable costs of transporting freight for our customers, fixed costs, and expenses containing both fixed and variable components. The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training, and recruitment, and independent contractor costs, which are recorded under purchased transportation.
The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training and recruitment, and independent contractor costs, which are recorded under purchased transportation. Expenses that have both fixed and variable components include maintenance and tire expense and our cost of insurance and claims.
At December 31, 2022, we had $80.6 million of cash and cash equivalents, $703.9 million in stockholders’ equity and no long-term debt outstanding.
At December 31, 2023, we had $53.2 million of cash and cash equivalents, $757.4 million in stockholders’ equity and no long-term debt outstanding.
In 2022, net cash flows provided by operating activities of $219.5 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $120.9 million, to repurchase and retire 2.3 million shares of our common stock for $41.8 million, to pay cash dividends of $19.6 million, and to construct and upgrade regional operating facilities in the amount of $11.2 million, resulting in a $23.6 million increase in cash and cash equivalents.
In 2023, net cash flows provided by operating activities of $164.4 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $163.9 million, to pay cash dividends of $19.5 million and to construct and upgrade regional operating facilities in the amount of $8.6 million, resulting in a $27.4 million decrease in cash and cash equivalents.
Fuel and fuel taxes increased by $33.2 million, or 33.8%, in 2021 from 2020. Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased $2.9 million, or 11.9%, to $26.9 million in 2021 from $24.1 million in 2020.
Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) increased $5.2 million, or 16.2%, to $37.1 million in 2023 from $31.9 million in 2022. Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads decreased to $16.0 million from $23.8 million in 2022.
Our Intermodal segment transports our customers’ freight within the United States utilizing our refrigerated containers and our temperature-controlled trailers, each on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers.
Our Intermodal segment transports our customers’ freight within the United States utilizing our refrigerated containers on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers. The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers.
Our operating expenses as a percentage of operating revenue, or “operating ratio,” improved to 88.5% in 2021 from 89.3% in 2020.
Our operating expenses as a percentage of operating revenue, or “operating ratio,” was 88.7% in 2022 and 88.5% in 2021.
This increase was due to a $48.6 million increase in Brokerage revenue, a $7.5 million increase in Intermodal revenue, net of fuel surcharges, a $5.3 million increase in Dedicated revenue, net of fuel surcharges, and a $3.9 million increase in Truckload revenue, net of fuel surcharges.
This decrease in 2023 was due to a $38.9 million decrease in Brokerage revenue, a $24.6 million decrease in Intermodal revenue, net of fuel surcharges, a $15.9 million decrease in Truckload revenue, net of fuel surcharges, and a $2.0 million decrease in Dedicated revenue, net of fuel surcharges.
As of that date, we had outstanding standby letters of credit to guarantee settlement of self-insurance claims of $16.1 million and remaining borrowing availability of $13.9 million. At December 31, 2021, there was also no outstanding principal balance on the facility. As of that date, we had outstanding standby letters of credit of $18.5 million on the facility.
The credit agreement amends, restates and continues in its entirety our previous credit agreement, as amended. At December 31, 2023, there was no outstanding principal balance on the facility. As of that date, we had outstanding standby letters of credit to guarantee settlement of self-insurance claims of $20.7 million and remaining borrowing availability of $9.3 million.
This increase was a primary factor in our net fuel expense increasing to 3.8% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, from 3.5% in 2020.
Despite this increase, our net fuel expense was 3.8% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, in each of 2022 and 2021.
This increase resulted primarily from additional company driver compensation expense of $53.8 million, a $7.1 million increase in non-driver compensation expense, a $3.8 million increase in employees’ health insurance expense as a result of higher self-insured medical claims and a $2.5 million increase in bonus compensation expense for our non-driver employees. 20 Purchased transportation consists of amounts payable to railroads and carriers for transportation services we arrange in connection with Brokerage and Intermodal operations and to independent contractor providers of revenue equipment.
This increase resulted primarily from additional company driver compensation expense of $53.8 million, a $7.1 million increase in non-driver compensation expense, a $3.8 million increase in employees’ health insurance expense as a result of higher self-insured medical claims and a $2.5 million increase in bonus compensation expense for our non-driver employees. 26 Purchased transportation expense increased $56.6 million in total, or 29.3%, in 2022 from 2021.
In 2020, net cash flows provided by operating activities of $189.6 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $102.2 million, to pay cash dividends of $52.4 million, and to upgrade and acquire regional operating facilities in the amount of $5.4 million, resulting in a $34.7 million increase in cash and cash equivalents. 25 We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $225 million in 2023.
In 2023, net cash flows provided by operating activities of $164.4 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $163.9 million, to pay cash dividends of $19.5 million and to construct and upgrade regional operating facilities in the amount of $8.6 million, resulting in a $27.4 million decrease in cash and cash equivalents.
We repurchased and retired 53,064 shares of common stock for $597,000 in the first quarter of 2020. As of December 31, 2022, future repurchases of up to $33.2 million, or approximately 2.2 million shares, were available in the share repurchase program.
As of December 31, 2023, future repurchases of up to $33.2 million, or approximately 2.2 million shares, were available in the share repurchase program.
We do not assume, and specifically disclaim, any obligation to update any forward-looking statement contained in this report. Overview We have strategically transitioned from a refrigerated long-haul carrier to a multifaceted business offering a network of refrigerated and dry truck-based transportation capabilities across our five distinct business platforms – Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico.
Overview We have strategically transitioned from a refrigerated long-haul carrier to a multifaceted business offering a network of time and temperature-sensitive and dry truck-based transportation and distribution capabilities across our five distinct business platforms – Truckload, Dedicated, Intermodal, Brokerage and MRTN de Mexico. Our Truckload segment provides a combination of regional short-haul and medium-to-long-haul full-load transportation services.
Additionally, we are an active participant in the United States EPA SmartWay Transport Partnership, in which freight shippers, carriers, logistics companies and other voluntary stakeholders partner with the EPA to measure, benchmark and improve logistics operations to reduce their environmental footprint. 17 This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes discussions of operating revenue, net of fuel surcharge revenue; Truckload, Dedicated and Intermodal revenue, net of fuel surcharge revenue; operating expenses as a percentage of operating revenue, each net of fuel surcharge revenue; and net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads).
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes discussions of operating revenue, net of fuel surcharge revenue; Truckload, Dedicated and Intermodal revenue, net of fuel surcharge revenue; operating expenses as a percentage of operating revenue, each net of fuel surcharge revenue; and net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads).
Our operating revenue, net of fuel surcharges, increased $197.5 million, or 23.1%, compared with 2021. Truckload segment revenue, net of fuel surcharges, increased 18.8% from 2021, primarily due to an increase in our average revenue per tractor. Dedicated segment revenue, net of fuel surcharges, increased 21.7% from 2021, primarily due to an increase in our average revenue per tractor.
Our operating revenue, net of fuel surcharges, decreased $81.4 million, or 7.7%, compared with 2022. Truckload segment revenue, net of fuel surcharges, decreased 3.9% from 2022, primarily due to a decrease in our average revenue per tractor, despite an increase in our average fleet size.
We expect our purchased transportation expense to increase as we grow our Intermodal and Brokerage segments. Fuel and fuel taxes increased by $87.3 million, or 66.5%, in 2022 from 2021.
The portion of purchased transportation expense related to independent contractors within our Truckload and Dedicated segments, including fuel surcharges, increased $1.3 million in 2023. We expect our purchased transportation expense to increase as we grow our Intermodal and Brokerage segments. Fuel and fuel taxes decreased by $38.1 million, or 17.4%, in 2023 from 2022.
This amount includes commitments to purchase $164.3 million of new revenue equipment and $4.7 million in building construction in 2023. Additionally, operating lease obligations total $774,000 through 2028. A quarterly cash dividend of $0.06 per share of common stock was paid in each quarter of 2022 which totaled $19.6 million.
We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $165 million in 2024. This amount includes commitments to purchase $181 million of new revenue equipment in 2024. Additionally, operating lease obligations total $561,000 through 2028. Quarterly cash dividends of $0.06 per share of common stock were paid in each quarter of 2023 which totaled $19.5 million.
The improvement in the operating ratio in 2021 was primarily due to increased rates with our customers and a decrease in the amounts payable to carriers for transportation services which we arranged as a percentage of our Brokerage revenue.
This increase was due to higher costs across most areas of the segment, partially offset by a decrease in the amounts payable to carriers for transportation services which we arranged as a percentage of our Brokerage revenue.
Expenses that have both fixed and variable components include maintenance and tire expense and our cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency and other factors.
These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs relate to the acquisition and subsequent depreciation of long-term assets, such as revenue equipment and operating terminals.
We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $225 million in 2023. A quarterly cash dividend of $0.06 per share of common stock was paid in each quarter of 2022 which totaled $19.6 million.
We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $165 million in 2024. Quarterly cash dividends of $0.06 per share of common stock were paid in each quarter of 2023 which totaled $19.5 million. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months.
Our operating income improved 28.3% to $143.3 million in 2022 from $111.7 million in 2021 as a result of the foregoing factors. Our operating expenses as a percentage of operating revenue, or “operating ratio,” was 88.7% in 2022 and 88.5% in 2021.
Our operating expenses as a percentage of operating revenue, or “operating ratio,” was 92.0% in 2023 and 88.7% in 2022.
We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future.
Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future. 19 We continue to invest considerable time and capital resources to actively implement and promote long-term environmentally sustainable solutions that drive reductions in our fuel and electricity consumption and decrease our carbon footprint.
We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future.
Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future. 28 In August 2022, we entered into a credit agreement that provides for an unsecured committed credit facility with an aggregate principal amount of $30.0 million which matures in August 2027.
Our significant self-insured retention exposes us to the possibility of significant fluctuations in claims expense between periods which could materially impact our financial results depending on the frequency, severity and timing of claims.
Our significant self-insured retention exposes us to the possibility of significant fluctuations in claims expense between periods which could materially impact our financial results depending on the frequency, severity and timing of claims. 23 Gain on disposition of revenue equipment was $13.6 million in 2023, up slightly from $13.4 million in 2022 primarily due to an increase in the number of units sold, offset by a decrease in the average gain for our tractor and trailer sales.
The United States Department of Energy, or DOE, national average cost of fuel increased to $4.99 per gallon from $3.29 per gallon in 2021. Despite this increase, our net fuel expense was 3.8% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, in both 2022 and 2021.
The United States Department of Energy, or DOE, national average cost of fuel decreased to $4.21 per gallon from $4.99 per gallon in 2022.
Our main fixed costs relate to the acquisition and subsequent depreciation of long-term assets, such as revenue equipment and operating terminals. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, along with any increases in fleet size.
We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, along with any increases in fleet size. Although certain factors affecting our expenses are beyond our control, we monitor them closely and attempt to anticipate changes in these factors in managing our business.
Dedicated segment revenue increased $19.7 million, or 6.3%, to $329.4 million in 2021 from $309.8 million in 2020. Dedicated segment revenue, net of fuel surcharges, increased 2.0% primarily due to an increase in our average revenue per tractor. The operating ratio was negatively impacted in 2021 by increases in both company driver compensation expense and driver recruiting costs.
Dedicated segment revenue decreased $20.8 million, or 4.9%, to $408.3 million in 2023 from $429.1 million in 2022. Dedicated segment revenue, net of fuel surcharges, decreased 0.6% primarily due to a decrease in our average revenue per tractor. The operating ratio was 88.2% in each of 2023 and 2022.
The operating ratio for our Truckload segment was 87.1% in 2021 and 89.5% in 2020, for our Dedicated segment was 89.0% in 2021 and 86.8% in 2020, for our Intermodal segment was 90.7% in 2021 and 93.5% in 2020, and for our Brokerage segment was 89.8% in 2021 and 92.8% in 2020.
The operating ratio for our Truckload segment was 94.7% in 2023 and 88.1% in 2022, for our Dedicated segment was 88.2% in each of 2023 and 2022, for our Intermodal segment was 100.2% in 2023 and 91.8% in 2022, and for our Brokerage segment was 89.7% in 2023 and 88.9% in 2022.
As a result of the factors described above, net income improved 22.9% to $85.4 million, or $1.02 per diluted share, in 2021 from $69.5 million, or $0.84 per diluted share, in 2020. 24 Liquidity and Capital Resources Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers.
Our net income declined 36.2% to $70.4 million, or $0.86 per diluted share, in 2023 from $110.4 million, or $1.35 per diluted share, in 2022. Our business requires substantial ongoing capital investments, particularly for new tractors and trailers.
Future gains or losses on dispositions of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control. The $11.2 million increase in other operating expenses in 2022 was primarily due to increases in costs associated with driver recruitment and retention along with travel and meals expense.
Future gains or losses on dispositions of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control. Our operating income declined 37.1% to $90.1 million in 2023 from $143.3 million in 2022 as a result of the foregoing factors.
Amounts payable to carriers for transportation services we arranged in our Brokerage segment increased $39.5 million to $121.1 million in 2021 from $81.6 million in 2020, primarily due to an increase in the cost per load within the tight freight market and growth in load volume.
Amounts payable to carriers for transportation services we arranged in our Brokerage segment decreased $34.1 million to $136.1 million in 2023 from $170.1 million in 2022, primarily due to decreases in both our cost per load and number of loads.
Brokerage segment revenue increased $48.6 million, or 50.2%, to $145.3 million in 2021 from $96.7 million in 2020 primarily due to increases in both the number of loads and in revenue per load.
Brokerage segment revenue decreased $38.9 million, or 19.0%, to $165.6 million in 2023 from $204.6 million in 2022 primarily due to decreases in both our revenue per load and our number of loads. The operating ratio in 2023 of 89.7% was up from 88.9% in 2022.
Intermodal segment revenue increased $13.5 million, or 15.2%, to $102.2 million in 2021 from $88.7 million in 2020. Intermodal segment revenue, net of fuel surcharges, increased 9.4% from 2020 primarily due to an increase in revenue per load.
Truckload segment revenue decreased $35.0 million, or 7.0%, to $465.5 million in 2023 from $500.5 million in 2022. Truckload segment revenue, net of fuel surcharges, decreased $15.9 million, or 3.9%, to $395.6 million in 2023 from $411.4 million in 2022 primarily due to a decrease in our average revenue per tractor, despite an increase in our average fleet size.
Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 87.0% in 2021 from 88.2% in 2020. Our effective income tax rate decreased to 23.5% in 2021 from 25.6% in 2020 primarily due to decreases in per diem and other non-deductible expenses and in state income taxes.
Our effective income tax rate increased to 25.1% in 2023 from 23.5% in 2022 primarily due to increases in per diem and other non-deductible expenses.
Intermodal segment revenue, net of fuel surcharges, increased 14.8% from 2021, primarily due to an increase in revenue per load. Brokerage segment revenue increased 40.8%, primarily due to an increase in the number of loads in 2022. Fuel surcharge revenue increased to $210.4 million in 2022 from $117.7 million in 2021, primarily due to higher fuel costs.
Intermodal segment revenue decreased $37.7 million, or 29.0%, to $92.1 million in 2023 from $129.8 million in 2022. Intermodal segment revenue, net of fuel surcharges, decreased 24.5% from 2022 primarily due to decreases in both our number of loads and our revenue per load. The operating ratio in 2023 increased to 100.2% from 91.8% in 2022.
Our operating revenue, net of fuel surcharges, increased $65.4 million, or 8.3%, to $855.9 million in 2021 from $790.6 million in 2020.
Our operating revenue, net of fuel surcharges, decreased $81.4 million, or 7.7%, to $972.0 million in 2023 from $1.053 billion in 2022.
Gain on disposition of revenue equipment was $16.3 million in 2021, up from $8.7 million in 2020 primarily due to an increase in the average gain for our tractor and trailer sales along with an increase in the number of units sold. Gain on disposition of facility was $1.7 million in 2020.
The $5.7 million, or 5.1%, increase in depreciation in 2023 was primarily due to an increase in our average tractor fleet size during the year, along with higher prices of new equipment.
Removed
The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers.
Added
We do not assume, and specifically disclaim, any obligation to update any forward-looking statement contained in this report.
Removed
Although certain factors affecting our expenses are beyond our control, we monitor them closely and attempt to anticipate changes in these factors in managing our business. For example, fuel prices have significantly fluctuated over the past several years.
Added
Dedicated segment revenue, net of fuel surcharges, decreased 0.6% from 2022, primarily due to a decrease in our average revenue per tractor. Intermodal segment revenue, net of fuel surcharges, decreased 24.5% from 2022, primarily due to decreases in both our number of loads and our revenue per load.
Removed
We continue to invest considerable time and capital resources to actively implement and promote long-term environmentally sustainable solutions that drive reductions in our fuel and electricity consumption and decrease our carbon footprint.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed5 unchanged
Biggest changeBased upon our fuel consumption in 2022, a 5% increase in the average cost of diesel fuel would have increased our fuel expense by $10.7 million. We have historically been able to pass through a significant portion of long-term increases in diesel fuel prices and related taxes to customers in the form of fuel surcharges.
Biggest changeBased upon our fuel consumption in 2023, a 5% increase in the average cost of diesel fuel would have increased our fuel expense by $8.8 million. We have historically been able to pass through a significant portion of long-term increases in diesel fuel prices and related taxes to customers in the form of fuel surcharges.
While we do not currently have any outstanding hedging instruments to mitigate this market risk, we may enter into derivatives or other financial instruments to hedge a portion of our fuel costs in the future. 27
While we do not currently have any outstanding hedging instruments to mitigate this market risk, we may enter into derivatives or other financial instruments to hedge a portion of our fuel costs in the future. 30

Other MRTN 10-K year-over-year comparisons